Customer LTV calculator
See what a single customer is worth over their lifetime — using your real revenue per customer, margin, and churn rate.
Enter your average monthly revenue per customer, your gross margin, and your monthly churn rate. The calculator converts churn into an expected customer lifetime, then works out what that customer is worth across that lifetime.
Customer LTV calculator inputs and results
How this calculator works
Churn rate implies an average lifetime: a 3% monthly churn rate means a typical customer sticks around for about 1 ÷ 0.03, or roughly 33 months, before churning. That lifetime is then multiplied by your monthly margin per customer — average revenue per customer times gross margin — to get a single lifetime value figure.
This is an average across your whole customer base, not a prediction for any one customer. Real customers churn at different points, but the average is what matters for comparing against acquisition cost or planning how much you can afford to spend to win a new customer.
About this tool
This tool is a free calculator. Inputs: average revenue per customer (ARPU) per month, gross margin %, and monthly churn rate %. Output: average customer lifetime in months, and customer lifetime value (LTV) in dollars. Formula basis: ARPU multiplied by gross margin, divided by monthly churn rate.
Frequently asked questions
How is customer lifetime value calculated?
The standard formula divides average monthly revenue per customer, multiplied by your gross margin, by your monthly churn rate. Dividing by churn rate is what converts a single month of revenue into an expected lifetime figure — a lower churn rate means each customer is expected to stick around longer, so a 1% monthly churn rate implies a much longer average lifetime than a 5% rate.
Why does the calculator use gross margin and not just revenue?
LTV is meant to represent the value you actually keep from a customer, not just the revenue that passes through. Hosting, support, and payment processing costs all eat into that revenue, so multiplying by gross margin gives a more honest number to compare against acquisition cost.
What's a healthy LTV to CAC ratio?
A commonly cited benchmark is 3:1 — customer lifetime value at least three times your customer acquisition cost. Below that, growth tends to strain cash flow even if the business is technically profitable per customer. Use the CAC payback calculator alongside this one to check both sides.