LTV Calculator
Estimate customer lifetime value from ARPU with churn or an assumed lifetime, then apply gross margin.
Calculator
e.g. 3 means 3% of customers or MRR lost per month.
Applied to LTV (use 100 if you want pre-margin LTV).
Results
LTV
$3,333.33
Customer lifetime value
Implied lifetime
33.3 mo
What this means
This LTV is a model estimate. Use it to cap CAC and stress-test churn—not as a guarantee of cash you’ll collect.
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LTV Summary
A common SaaS LTV shortcut is (ARPU ÷ monthly churn) × gross margin. Alternatively use ARPU × lifetime months × margin.
Explanation
LTV is estimated lifetime contribution after gross margin.
Implied lifetime shows how many months that model assumes a customer stays.
Business implication: small churn improvements often raise LTV more than large ARPU bumps.
Step-by-step example
ARPU $125, churn 3%/mo, margin 80%:
- Lifetime ≈ 1 ÷ 0.03 ≈ 33.3 months
- Gross LTV: $125 ÷ 0.03 ≈ $4,166.67
- Margin LTV: $4,166.67 × 0.80 ≈ $3,333.33
Formula
LTV (churn) = (ARPU ÷ Monthly churn) × Gross margin
LTV (lifetime) = ARPU × Lifetime months × Gross margin
Helpful tips
- Use the same ARPU definition you use in MRR reporting.
- Compare LTV to CAC—under ~3:1 often means acquisition is too expensive or retention is weak.
FAQ
What is LTV?
Lifetime value estimates how much gross-margin-adjusted revenue a customer is worth over their subscription life.
Why divide ARPU by churn?
If monthly churn is constant, expected lifetime in months is roughly 1 ÷ churn rate, so LTV ≈ ARPU ÷ churn (then × gross margin).
Should LTV use revenue or gross profit?
Unit economics usually apply gross margin so LTV is comparable to CAC (cash contribution, not top-line revenue).
How accurate is this calculator?
It uses common SaaS approximations. Cohorts, expansion revenue, and discounting (NPV) can change advanced LTV models.
Related tools
Key terms
LTV
Definition. Customer lifetime value—estimated gross profit (or revenue, depending on model) from a customer over the relationship.
In simple terms. LTV helps you decide how much you can spend to acquire a customer. Simple models use average revenue, margin, and lifespan or churn.
Common simple form: LTV ≈ ARPU × gross margin × average customer lifespan
Example. $50/month, 70% margin, 24-month average life → LTV ≈ $840 in that model.
Common mistake. Using revenue LTV against costs that need gross-profit LTV—or ignoring churn.
Related calculators. LTV Calculator, LTV:CAC Ratio Calculator
Related terms. CAC, LTV:CAC ratio, MRR
CAC
Definition. Customer acquisition cost—what you spend, on average, to win one new customer.
In simple terms. CAC usually includes ads, sales time, tools, and related acquisition spend for a period, divided by new customers won in that period.
CAC = acquisition spend ÷ new customers acquired
Example. $5,000 marketing spend and 25 new customers → $200 CAC.
Common mistake. Excluding sales labor or counting leads instead of paying customers.
Related calculators. CAC Calculator, LTV:CAC Ratio Calculator
Related terms. LTV, LTV:CAC ratio, ROI
MRR
Definition. Monthly recurring revenue—normalized subscription revenue you expect every month.
In simple terms. MRR smooths annual and monthly plans into a monthly run-rate so growth and churn are easier to compare. One-time setup fees usually are not MRR.
MRR ≈ sum of normalized monthly subscription amounts
Example. Ten customers on $50/month and two on $600/year ($50/month each) → $600 MRR.
Common mistake. Mixing one-time revenue into MRR or forgetting to normalize annual plans.
Related calculators. MRR Calculator, ARR Calculator
Notes & Assumptions
LTV approximations like ARPU/churn are widely taught in SaaS unit-economics frameworks; refine with cohort data as you mature.
Last reviewed: July 2026