LTV Calculator

This LTV calculator answers one question: how much gross profit does a single customer bring in before they leave? Enter the average monthly revenue per customer (ARPU), your gross margin and the monthly churn rate, and the tool returns the lifetime value, the average customer lifetime in months, the gross profit per month, and the LTV as a multiple of monthly revenue. Add the optional CAC field and three more rows appear: the LTV : CAC ratio, the number of months it takes to recover the acquisition cost, and the net value per customer once that cost is paid. Leave CAC blank and those three rows disappear entirely rather than printing a zero.

As a customer lifetime value calculator it works for any subscription or repeat-purchase business — SaaS plans, memberships, phone contracts, insurance policies, a coffee shop’s regulars — as long as the three rates describe the same customers and the same period. A lifetime value calculator of this kind is not a measurement; it is a projection built from two averages you can look up in your own books. There is also no unit switch to worry about: this is not a length converter with a cm or inches toggle, because every input is either money or a rate.

What the LTV Calculator Measures

LTV — customer lifetime value, also written CLV — is the total gross profit a customer generates over the whole relationship, not the total revenue they pay. The difference is the margin. A customer who pays $40 a month for 20 months hands over $800 of revenue, but if 65% of that revenue goes to the direct cost of serving them, the business keeps far less. This tool computes the gross-margin version: monthly revenue per customer times gross margin times average customer lifetime.

That distinction matters more than any other on this page, because marketing material usually quotes a revenue-based LTV. A pitch deck that says “our LTV is $800” has multiplied the bill by the number of months and stopped there; the same company plugged into this calculator reports the money left after direct costs — the money that can actually pay for acquisition, overhead and profit. The gap is not a rounding detail. Two companies with the same ARPU and the same lifetime can report very different LTVs if one runs at a 35% gross margin and the other at 80%, which is why an LTV figure is only comparable when you know which definition produced it.

It is also an estimate, and it moves. Both the churn rate and the gross margin are averages drawn from a period, and LTV is the product of the two — so a change in either one changes the result, and a change in churn changes it twice, because churn sets the length of the lifetime as well. If retention improves, the same monthly profit is collected for more months; if margin slips, every one of those months contributes less. Treat the number as a planning figure that should be recomputed whenever the underlying rates move, not as a fixed fact about the business.

The LTV Formula and the Inputs Behind It

The LTV formula is a product of three numbers: monthly revenue, gross margin and lifetime. This is also the customer lifetime value formula you will find in any finance text — the only choice is how you decide the lifetime.

\[ \text{LTV} = \text{ARPU} \times \frac{\text{gross margin}}{100} \times \text{average customer lifetime in months} \]

Every quantity in that expression has its own unit and its own row on the card, so a dollar figure is never mixed with a ratio:

Symbol	Meaning	How it is computed
ARPU	average revenue per user per month, in dollars	the value you enter; must be zero or greater
M	gross margin, in percent	the value you enter; between 0 and 100
c	monthly churn rate, in percent per month	the value you enter; must be greater than zero
t	average customer lifetime in months	1 ÷ c, written as 100 ÷ churn in percent (5% ⇒ 20 months)
g	gross profit per month	ARPU × M ÷ 100
LTV	lifetime value, the main reading	g × t
Multiple	LTV as a multiple of monthly revenue	LTV ÷ ARPU, shown with a × marker
CAC	customer acquisition cost — optional	the value you enter, or blank; blank hides the three CAC rows

The lifetime is the piece people get wrong by hand, so the tool derives it instead of asking for it directly:

\[ \text{Average customer lifetime (months)} = \frac{1}{\text{monthly churn rate}} = \frac{100}{\text{churn rate in percent per month}} \]

Why churn and not a number of months? Because churn is observable and lifetime is derived. You can count how many customers left this month and divide by how many you had — that is a fact from your own dashboard. Nobody can observe how long today’s customers will stay; asking for a number of months invites everyone to estimate on their own terms, one person using the contract length, another using a feeling, and the same input data then produces different LTVs on different pages. One observable rate keeps the arithmetic reproducible.

The remaining rows all come from the same three numbers:

\[ \text{Gross profit per month} = \text{ARPU} \times \frac{\text{margin}}{100} \]

\[ \text{LTV as a multiple of monthly revenue} = \frac{\text{LTV}}{\text{ARPU}} \]

\[ \text{LTV : CAC ratio} = \frac{\text{LTV}}{\text{CAC}}, \qquad \text{Months to recover CAC} = \frac{\text{CAC}}{\text{gross profit per month}} \]

\[ \text{Net value per customer} = \text{LTV} – \text{CAC} \]

Precision and boundaries. ARPU, gross margin and churn rate are required; CAC is optional. A churn rate must be greater than zero, the gross margin is capped at 100, and none of the four fields accepts a negative number. CAC may be left blank, and blank is not zero — the rows that depend on it collapse instead of computing a false reading from an assumed zero acquisition cost. Results are rounded to at most six decimal places with trailing zeros dropped, so a payback figure appears as 7.142857 months rather than a longer tail, and large amounts are printed without thousands separators: $1500 stays $1500, never $1,500. The underlying arithmetic keeps full precision; only the display is rounded.

How to Calculate LTV by Hand

Three multiplications and one division reproduce the card. Take the default case: $40 of monthly revenue, a 35% gross margin and 5% monthly churn. First the gross profit per month: 40 × 0.35 = $14. Then the lifetime: 100 ÷ 5 = 20 months. Then LTV: 14 × 20 = $280, which is the same as writing it the way the card does, $14/mo × 20 months = $280. If a CAC is known, the LTV : CAC ratio is the LTV divided by it and the payback is the CAC divided by the $14 monthly gross profit — the calculator prints both, but either can be checked on a phone.

What the Calculator Says When It Cannot Compute

Every rejected input gets its own explanation instead of a silent zero, and the previous result stays on screen so you do not lose the context of what you had a moment ago:

• A field left blank or filled with something that is not a number: Please enter a valid number in the ARPU, gross margin, churn rate and CAC fields.
• A negative value in any field: ARPU, gross margin, churn rate and CAC cannot be negative.
• A churn rate of zero: The monthly churn rate must be greater than zero — a customer lifetime of 1 ÷ churn is infinite at zero, so LTV would be infinite too.
• A gross margin above 100%: The result is out of range for these inputs.

The churn message deserves a second look. A zero churn rate is not “no customers leave” as a harmless input — it means nobody ever leaves, the average lifetime is infinite, and LTV would be infinite too. The tool refuses to print an infinity dressed up as a conclusion, exactly as it refuses to print a blank CAC as a zero.

How to Use the LTV Calculator

1. Enter the ARPU — the average monthly revenue one customer pays you. Divide monthly recurring revenue by the number of active customers if you do not have the figure already; it is the top line of the whole calculation.
2. Enter the gross margin as a percent — the share of that revenue left after the direct cost of serving the customer. If you only know your overall margin, use that; the tool does not ask where the number came from, only that it is between 0 and 100.
3. Enter the monthly churn rate as a percent — customers lost in the month divided by customers at the start, times 100. It must be greater than zero; the calculator will not pretend a zero-churn business has a finite lifetime.
4. Add the CAC if you want the acquisition side: total sales and marketing spend divided by new customers won in the same period. Leave it empty if you do not have it — the three rows that depend on it are hidden rather than filled with zeros.
5. Read the card top to bottom: the main reading under “Lifetime value per customer”, the equation line, then the breakdown rows — average customer lifetime, gross profit per month, the multiple of monthly revenue, and, with a CAC, the ratio, the payback and the net value. The result recalculates as you type.
6. Copy what you need: “Copy Result” copies the headline figure alone, “Copy Summary” copies the summary line and the equation together, and “Reset” returns the form to the default example of $40 ARPU, 35% margin, 5% churn and a $100 CAC. A shared link carries your four inputs so the page can recompute them on arrival.

Worked Examples You Can Check by Hand

The three examples below are the tool’s own arithmetic, printed the way the card prints it: no thousands separators, at most six decimals, trailing zeros dropped.

Example 1 — $40 ARPU, 35% margin, 5% churn, $100 CAC

This is the card’s default case. The gross profit per month is $14 and the average customer lifetime is 100 ÷ 5 = 20 months, so the card is titled Lifetime value per customer, the main reading is $280, and the equation line reads $14/mo × 20 months = $280. The summary folds the CAC into the same sentence: LTV $280 — gross profit $14/mo over 20 months, LTV : CAC 2.8×. The breakdown rows add the context the headline cannot carry. LTV is 7× the monthly revenue, because $280 ÷ $40 = 7. The LTV : CAC ratio is 2.8× — $280 ÷ $100 — and Months to recover CAC is 7.142857 months: at $14 of gross profit a month, the $100 acquisition cost takes a little over seven months to earn back. Net value per customer is $180, the $280 lifetime gross profit minus the $100 acquisition cost.

Example 2 — $60 ARPU, 50% margin, 2% churn, $150 CAC

Same tool, a stickier and richer customer. The gross profit per month is $30, the lifetime is 100 ÷ 2 = 50 months, and the equation line reads $30/mo × 50 months = $1500 under the title Lifetime value per customer. The summary is LTV $1500 — gross profit $30/mo over 50 months, LTV : CAC 10×. The rows show what retention does to every derived figure: the LTV is 25× the monthly revenue, the LTV : CAC ratio is 10× against the $150 acquisition cost, and Months to recover CAC is only 5 months, because each month of the relationship now returns $30 instead of $14. Net value per customer is $1350 — the $1500 of lifetime gross profit minus the $150 CAC.

Example 3 — $25 ARPU, 40% margin, 8% churn, no CAC

A faster-churning product with the CAC field left blank. The gross profit per month is $10, the lifetime is 100 ÷ 8 = 12.5 months, and the equation line reads $10/mo × 12.5 months = $125 under the title Lifetime value per customer. The summary stops after the lifetime: LTV $125 — gross profit $10/mo over 12.5 months. The LTV is 5× the monthly revenue, and the three CAC-dependent rows — the LTV : CAC ratio, months to recover CAC and net value per customer — are not shown at all. That is the blank-CAC rule in action: with no acquisition cost there is no ratio to compute, and printing one anyway would invent a number.

Row	Example 1	Example 2	Example 3
Main reading (LTV)	$280	$1500	$125
Average customer lifetime	20 months	50 months	12.5 months
Gross profit per month	$14	$30	$10
LTV as a multiple of monthly revenue	7×	25×	5×
LTV : CAC ratio	2.8×	10×	not shown (no CAC)
Months to recover CAC	7.142857 months	5 months	not shown (no CAC)
Net value per customer	$180	$1350	not shown (no CAC)

Read the three columns together and the pattern is the same one the formula predicts: the second example wins on all three inputs at once — higher revenue, higher margin, lower churn — and beats the first everywhere; the third pays for weak retention with a short lifetime, and even though its margin is higher than the first example’s, the revenue is lower and the churn is faster, so the LTV lands smaller.

What a Good LTV CAC Ratio Looks Like

A widely repeated guideline treats an LTV CAC ratio of 3× or higher as a healthy sign and anything under 1× as trouble: below 1 you are paying more to win a customer than the gross profit that customer returns, so each sale starts by destroying value. That threshold is a rule of thumb, not a law. It compresses a whole business model into one number — it ignores payback timing, fixed costs and how repeatable the acquisition is — and the right bar differs between a fast self-serve product and an enterprise sale that carries real service costs. What the ratio does give you is a common language: the same 3× yardstick applies to every channel, so a paid campaign and a referral program can be compared on the profitability of the customers each one brings.

Two practical cautions. First, compare like with like: a ratio computed from gross-margin LTV is not comparable with one quoted from revenue-based LTV, because the second flatters every channel equally in dollar terms but changes the ranking once costs differ. Second, pair the ratio with the payback line this calculator prints — a high ratio collected over a very long lifetime can still strain a small budget, while a modest ratio that pays back in a few months keeps cash moving. The net value per customer row is the one to read last: it converts the ratio back into money, which is what you actually spend.

LTV Calculator FAQ

How do you calculate LTV?

Multiply the monthly gross profit per customer by the average lifetime in months. Gross profit is ARPU times the margin, and the lifetime is 1 ÷ churn — with $40 of monthly revenue, a 35% margin and 5% churn that is $14 × 20 months = $280. The calculator prints each of those steps as its own row, so the result can be checked line by line instead of trusted as one number.

Why does the calculator ask for churn instead of letting me type a number of months?

Because churn is observable and lifetime is derived. You can count how many customers left this month and divide by how many you had at the start — that figure sits in your own records. A number of months does not: everyone would estimate it on different terms, one person by contract length, another by gut feeling, and the same customer data would produce different LTVs depending on who filled the form.

What is a good LTV CAC ratio?

An LTV CAC ratio of 3× or higher is the most common rule of thumb, and anything under 1× means acquisition costs more than the gross profit the customer returns. Treat the 3× line as a starting benchmark rather than a verdict: it does not account for fixed costs, for how quickly the money is recovered, or for differences between a self-serve signup and a long enterprise sale, so adjust it to your own model and compare channels against each other on the same definition.

What happens if I leave the CAC field blank?

The calculator simply hides the three rows that depend on acquisition cost: the LTV : CAC ratio, months to recover CAC and net value per customer. Blank is not treated as zero — that would compute a payback of nothing and a ratio against a customer who was free to acquire, a false reading that looks like a conclusion. If you do know your acquisition cost, type it in and the rows appear; if you genuinely acquire customers at no cost, enter 0 and the tool will say so honestly.

Why can’t the churn rate be zero?

A zero churn rate means no customer ever leaves, so the average lifetime is infinite and LTV would be infinite too. The calculator raises an explicit error instead of printing an infinity: The monthly churn rate must be greater than zero — a customer lifetime of 1 ÷ churn is infinite at zero, so LTV would be infinite too. In practice this catches a blank or mistyped field more often than a genuine never-churn business.

Is this a CLV calculator as well?

Yes — CLV (customer lifetime value) and LTV (lifetime value) are two names for the same quantity, so a search for a CLV calculator and one for an LTV calculator land on the same arithmetic. The only thing to check on any calculator of this family is which definition it uses, because a revenue-based CLV and the gross-margin version here will not match, and the margin version is the one that tells you what you can afford to pay for a customer.

Why is my LTV lower than the figure in our marketing deck?

Most decks quote revenue-based LTV — the monthly bill multiplied by the expected number of months — while this tool multiplies by the gross margin first. The two numbers describe different things: the deck’s version is money that arrives, this one is money that stays after the direct cost of serving the customer. Both are legitimate; only the margin version can be compared with a CAC, because acquisition is paid from gross profit, not from revenue.

Do churn and margin changes really move the result that much?

Yes, and more than either input alone, because LTV is a product of both. A lower churn rate stretches the average lifetime, so the same monthly profit is collected for more months, and a lower margin shrinks every one of those months at the same time. That is why the comparison table above shows the sticky product winning on every row at once — and why the number on this card should be recomputed whenever the two rates move rather than quoted from last year’s spreadsheet.

Related Tools

LTV is one number in a family. The CAC calculator measures the other side of the same ratio — what it costs to win one customer — and can take this page’s LTV as its optional input. The ROI calculator turns costs and returns into a percentage, the ROAS calculator compares ad revenue against ad spend, and read together they answer the question LTV alone cannot: whether the customers were worth paying to acquire.