LTV Calculator

What is customer lifetime value (LTV)?

Customer lifetime value (LTV, also called CLV) is the total gross profit you expect to earn from an average customer over the entire time they stay subscribed. It is the value side of your unit economics: paired with customer acquisition cost, it tells you whether each new customer creates value or destroys it. Get LTV wrong — usually by counting revenue instead of gross profit — and every downstream decision built on it, from ad budgets to sales comp, inherits the error.

This LTV calculator uses the margin-adjusted formula, runs entirely in your browser, and needs no sign-up.

The LTV formula, explained with a worked example

LTV = (ARPA × Gross margin %) ÷ Monthly churn rate

Each piece does one job. ARPA is your average monthly revenue per account. Gross margin converts that revenue into actual profit contribution. Dividing by monthly churn is the same as multiplying by expected customer lifetime, since average lifetime = 1 ÷ churn rate.

Worked example: ARPA of $500/month, 80% gross margin, 2% monthly revenue churn.

• Monthly gross profit per account = $500 × 0.80 = $400
• Expected lifetime = 1 ÷ 0.02 = 50 months
• LTV = $400 × 50 = $20,000

Skip the margin adjustment and you would report $25,000 — a 25% overstatement that flatters your LTV:CAC ratio and can justify acquisition spend the business cannot actually afford.

What's a good LTV?

There is no universal LTV number — $20,000 is exceptional for a self-serve tool and thin for enterprise. Judge LTV two ways. First, relative to CAC: directional 2026 medians put a healthy LTV:CAC at 3:1 or better (roughly 3–4× by funding stage). Second, through the churn that drives it: monthly revenue churn under ~2% is healthy, and the median sits around 1.5–3.5% depending on stage. See the full bands on our benchmarks page. Here is how churn moves LTV at $500 ARPA and 80% margin:

Halving churn doubles LTV. Nothing else in the formula has that leverage, which is why retention work usually beats acquisition work on ROI.

Common mistakes

• Using revenue instead of gross profit. A customer who pays $500 but costs $150 to serve is not worth $500 a month. Always apply gross margin.
• Mixing time units. Monthly ARPA needs monthly churn. Pairing monthly ARPA with an annual churn rate understates LTV by roughly 12×. Convert first with the churn rate calculator.
• Trusting the formula at very low churn. At 0.5% monthly churn the formula implies a 200-month lifetime. No SaaS has 17 years of cohort data to support that. Cap the modeled lifetime (5–7 years is common) when churn is very low.
• Ignoring expansion. The simple formula assumes flat ARPA. If your NRR is above 100%, it understates LTV — a reasonable bias for planning, but know it is there.