Customer Lifetime Value Calculator
Estimate the gross profit a typical customer brings over the relationship.
About the Customer Lifetime Value Calculator
Enter the average revenue per customer per month, your gross margin and the monthly churn rate. The calculator gives customer lifetime value (LTV), the average customer lifetime and the revenue per customer, with a chart of how many customers remain over time.
With a constant churn rate, the average customer stays 1 ÷ churn periods. Using gross margin rather than revenue makes LTV comparable with acquisition cost.
The formula
LTV = ARPU × gross margin ÷ churn rate
Worked example
50 a month per customer, 70% gross margin, 3% monthly churn
- Average lifetime: 1 ÷ 0.03 = 33.3 months
- Revenue per customer: 50 × 33.3 = 1,667
- LTV = 50 × 0.70 ÷ 0.03 = 1,167
Questions people ask
Why gross margin?
LTV should measure profit available to pay back acquisition costs.
Does it include expansion revenue?
No; with strong upsell, net revenue churn can be negative and this formula understates LTV.
What LTV to CAC ratio is healthy?
About 3:1 is a common benchmark; use the LTV:CAC Calculator.