Customer LTV Calculator

The calculator uses the simple churn-based definition of customer lifetime value:

LTV = (ARPU × gross margin) ÷ monthly churn

It shows two working figures underneath: monthly gross profit per customer (ARPU × margin) and average customer lifetime (1 ÷ churn, in months). With the defaults, $50 a month at an 80% gross margin and 3% monthly churn gives $40 of gross profit a month, a lifetime of 33.33 months and an LTV of $1,333.33.

The lifetime figure assumes the same share of customers leaves every month. Under that assumption, a 3% monthly churn means the average customer stays 1 ÷ 0.03 = 33.33 months. LTV is that lifetime multiplied by the monthly gross profit.

Because the margin is applied, this is a gross-profit LTV, not a revenue LTV. Set the margin to 100% and you get the revenue version: $1,666.67 with the other defaults.

Churn sits in the denominator, so small changes in it swing the result hard. Holding ARPU at $50 and margin at 80%:

Compare that with the other inputs. Raising ARPU 10%, to $55, lifts LTV to $1,466.67. Cutting churn from 3% to 2% lifts it to $2,000. A 100-month lifetime at 1% churn is more than eight years, which few young companies can back with data, so treat very low churn inputs with suspicion.

Churn can't be zero here: the field starts at 0.1%, and at zero the result shows a dash because the formula would divide by zero.

The formula works with any period, as long as ARPU and churn use the same one. For an annual plan at $480 a year, an 80% margin and 20% of customers not renewing each year, enter 480 and 20%. The LTV is $1,920 and the lifetime line reads 5, which here means years. The labels still say monthly; the numbers don't care.

Don't mix periods. A monthly ARPU with an annual churn rate understates LTV by roughly a factor of twelve, and an annual ARPU with a monthly churn rate overstates it by about the same.

LTV has no single agreed definition, so figures from different tools or reports often can't be compared directly. The usual differences:

• Revenue LTV: leaves out gross margin. Always larger than this calculator's result unless your margin is 100%.
• Discounted LTV: values future profit less than profit today. With a monthly discount rate d, the churn-based version becomes monthly gross profit ÷ (churn + d). At a 1% monthly rate, the default case falls from $1,333.33 to $1,000.
• Cohort LTV: adds up what real groups of customers have actually paid, month by month, instead of assuming steady churn. It needs a few months of history but captures customers who upgrade or who churn faster at the start.
• Expansion-adjusted LTV: builds in upgrades and price rises, which the simple formula ignores.

Comparing LTV with customer acquisition cost is common. With the defaults and a $250 CAC, LTV is 5.33 times CAC. Only compare ratios built on the same definitions: a revenue LTV against a fully loaded CAC tells a different story from a gross-profit LTV against ad spend alone.