Customer lifetime value calculator
ARPU, margin and churn, as LTV and the LTV to CAC ratio.
FreeRuns in your browserNo signupUpdated 2026-10-29
This is the simple model: LTV = ARPU × margin ÷ churn. It assumes churn is steady, which it rarely is in the first three months.
Lifetime value
$919
Gross profit over about 25.0 months
LTV to CAC
2.2 : 1
Thin (under 3)
| Measure | Value |
|---|---|
| Customer lifetime | 25.0 months |
| Gross profit per customer per month | $36.75 |
| Revenue LTV (before margin) | $1,225 |
| CAC payback | 11.4 months |
| Most you can spend per customer for a 3 : 1 ratio | $306 |
| Annual churn implied | 39% |
Investors usually look for LTV at least three times CAC and payback under 12 months. Reducing churn by one point often moves LTV more than any price change.
About this tool
How it works and how to read the result.
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Web app & SaaS development
SaaS products and web apps, from first version to scale.
See the serviceWhat it does
An LTV calculator estimates what a customer is worth over the time they stay, so you can judge what you can afford to spend to win one. Enter the average monthly revenue per customer, your gross margin, monthly churn and your customer acquisition cost. The page returns the expected lifetime in months, lifetime value on both a revenue and a gross-profit basis, the LTV to CAC ratio with a verdict, the months to recover CAC, and the most you could spend per customer for a healthy ratio. It runs in your browser.
How to use it
- Enter ARPU: monthly revenue divided by active customers. For yearly plans, divide the annual price by 12.
- Enter gross margin as a percentage and monthly churn as a percentage.
- Enter your CAC from your own figures or the CAC calculator.
- Read LTV, the ratio and the payback period.
- Change churn by a point to see how sensitive the result is.
How to read the result
Take a subscription at $49 a month with a 75% gross margin, 4% monthly churn and a $420 CAC. Lifetime is 1 divided by 0.04, or 25 months. Gross profit per customer is $36.75 a month, so the LTV is about $919, with a revenue LTV of $1,225. The ratio is about 2.2 to 1, which the page flags as thin, and CAC payback is around 11 months. For a 3 to 1 ratio at this LTV, CAC would need to drop to about $306.
Now cut churn to 3%. Lifetime stretches to 33 months and LTV to $1,225, the ratio becomes 2.9 to 1 and payback is unchanged. A single point of churn did more than a $5 price rise would.
The implied annual churn line, about 39% at 4% a month, is a useful sanity check. If your yearly renewal data says 20%, your monthly figure is too high.
Reducing churn is often a product problem: onboarding, performance, missing features. That is the work of our web app development service.
Questions
Frequently asked.
What is a good LTV to CAC ratio?
Three to one is the usual benchmark for a subscription business: each customer returns three times what it cost to acquire them. Below one, you lose money on every customer. Far above five often means you are spending too little on growth. Early-stage figures swing a lot, so recompute quarterly.
Why use gross margin rather than revenue?
Revenue overstates what a customer is worth, because serving them costs money: hosting, support, payment fees. Gross margin is the share you keep. The page shows revenue LTV too, but compare CAC against the margin figure if you want an honest ratio.
How do I measure monthly churn?
Customers who cancelled in the month divided by customers at the start of the month. Exclude customers who joined during the month. If you bill yearly, convert annual churn with the formula 1 minus the twelfth root of the retained share, or just use the annual figure divided by 12 as a rough start.
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