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Customer Lifetime Value Calculator

Estimate simple gross-profit LTV from monthly revenue, gross margin and customer churn, with an optional CAC comparison.

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Use one period and currency consistently. Change any value to recalculate.

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What this calculator measures

A common subscription LTV model divides monthly gross profit per customer by monthly customer churn. It is a compact planning model, not a promise about an individual customer. Small changes in churn can produce very large changes in estimated lifetime, especially when the observation period is short.

This calculator uses gross profit rather than revenue so the output can be compared more responsibly with acquisition cost. Use churn measured on customers, not revenue, unless you deliberately intend to model revenue retention instead.

How to use the Customer Lifetime Value Calculator

  1. Enter average monthly revenue per customer and gross margin.
  2. Enter monthly customer churn using a stable cohort definition.
  3. Optionally enter CAC to review the LTV:CAC ratio.
LTV = monthly ARPU × gross margin ÷ monthly customer churn

Expected lifetime is approximated as one divided by monthly churn. LTV:CAC divides gross-profit LTV by the optional acquisition cost.

Worked example

At $100 monthly ARPU, 80% gross margin and 2% monthly churn, simple gross-profit LTV is $4,000 and expected lifetime is about 50 months.

Assumptions and limitations

  • The simple model assumes churn and ARPU remain stable over time.
  • Very low churn requires long observation periods before the estimate is credible.
  • Expansion, contraction and discounting are not modeled separately.
  • Cohort LTV is preferable when sufficient historical data exists.

Related calculators

Customer Acquisition Cost CalculatorMeasure the blended sales and marketing cost required to acquire one new customer during a consistent period.CAC Payback Period CalculatorEstimate how many months of customer gross profit are required to recover the cost of acquiring that customer.Customer Churn CalculatorSeparate gross customer churn from net customer growth so newly acquired accounts do not hide losses in the starting cohort.MRR and ARR CalculatorNormalize recurring subscription revenue into MRR and ARR without mixing in one-time services or unearned contract value.