📈 Business & Marketing

LTV Calculator (Customer Lifetime Value)

Estimate Customer Lifetime Value for SaaS, subscription, and D2C businesses. Free online LTV calculator with churn input.

Loading calculator…

What This Calculator Tells You

Customer lifetime value (LTV) estimates how much gross profit an average customer generates before they cancel. It tells you how much you can afford to spend to acquire a customer and still make money.

This calculator uses the standard subscription formula: monthly revenue per customer × gross margin ÷ monthly churn rate.

What to Enter

ARPU per month ($) — average revenue per customer per month. For annual plans, divide the yearly price by 12.
Gross margin (%) — the share of revenue left after the direct cost of serving customers (hosting, payment fees, support, product costs). Software is often 70–85%; physical products are usually much lower.
Monthly churn (%) — the percentage of customers who cancel each month. If you only know annual churn, convert it first (see the FAQ below) — entering an annual figure as monthly will badly understate LTV.

Worked Examples

1. A B2B SaaS product

Customers pay $80 a month, gross margin is 80%, and 3% of customers cancel each month.

Enter $80, 80% and 3% → LTV $2,133.33, average lifetime 33.3 months.

2. A monthly subscription box

Customers pay $35 a month, but after product, packing and shipping the gross margin is 45%, and 9% cancel each month.

Enter $35, 45% and 9% → LTV $175, average lifetime 11.1 months.
If acquiring a subscriber costs more than about $58 (a third of LTV), growth is likely to burn cash.

3. What happens when churn drops

The SaaS company in example 1 cuts monthly churn from 3% to 2%.

Enter $80, 80% and 2% → LTV $3,200, average lifetime 50 months.
A one-point drop in churn raised LTV by 50% — often a bigger win than raising prices.

How It’s Calculated

LTV = (ARPU × Gross Margin %) ÷ Monthly Churn Rate. For contractual subscriptions: LTV = ARPU × Average Customer Lifetime (months).

LTV: Customer Lifetime Value
ARPU: Average Revenue Per User

How to Read Your Result

Compare with CAC. A common rule of thumb is LTV of at least three times CAC. Below 1:1 you lose money on every customer.
Be careful with very low churn. At 0.5% monthly churn, the formula assumes a 200-month (almost 17-year) customer life. Many teams cap LTV at three to five years of gross profit to stay conservative.
Average lifetime is simply 1 ÷ monthly churn. It is an average — many customers leave much sooner and a few stay far longer.

Common Mistakes to Avoid

Using revenue instead of gross profit. Revenue-based LTV ignores the cost of serving customers and can overstate value several-fold.
Entering annual churn as monthly. 30% annual churn is about 2.9% a month, not 30%.
Measuring churn on too few customers. With small cohorts, one or two cancellations swing churn wildly. Use several months of data.
Ignoring expansion revenue. If customers regularly upgrade, a flat ARPU understates LTV; if they downgrade, it overstates it.
Applying the formula to one-off purchases. For non-subscription stores, base LTV on average order value, gross margin and how often customers reorder.

Built and maintained by GenAlpha Tools Editorial. Formula tested against known answers and edge cases · last reviewed October 2026. How we calculate · Report an error

When to Use This Calculator

Set how much you can spend to acquire a customer.
Show investors the unit economics behind your growth plan.
Measure the payoff of reducing churn or raising prices.
Compare customer segments or plans to see which are most valuable.

Frequently Asked Questions

How do I convert annual churn to monthly churn?

Monthly churn = 1 − (1 − annual churn)^(1/12). For example, 30% annual churn is 1 − 0.70^(1/12) ≈ 2.93% a month.

Should LTV use revenue or gross profit?

Gross profit. LTV is meant to show what a customer is worth to the business after the direct costs of serving them, which is the figure you can compare with acquisition cost.

What is a good LTV to CAC ratio?

About 3:1 is the most widely cited rule of thumb. Much higher can mean you are under-investing in growth; below 1:1 means each new customer loses money.

Does this LTV formula account for discounting?

No. It is the simple, undiscounted formula most startups use. Finance teams sometimes discount future profit to today's dollars, which gives a lower figure.

Can I use this for an e-commerce store without subscriptions?

Only roughly. Treat the average monthly spend per customer as ARPU and the share of customers who stop buying each month as churn, or calculate LTV from order value, margin and repeat-purchase rate instead.

Do you store the values I enter?

No. All calculations happen in your browser. Your data never leaves your device.

Related Guides

Related Calculators

📈