Customer Lifetime Value (LTV) Calculator
Estimate subscription LTV from monthly revenue per user, gross margin and churn — the retention-based formula for recurring-revenue businesses.
How it works
Average lifespan (months) = 1 ÷ monthly churn · Revenue LTV = ARPU × lifespan · Profit LTV = revenue LTV × gross margin%
For subscription businesses, the average customer lifespan is the reciprocal of the churn rate — at 5% monthly churn a customer stays 1 ÷ 0.05 = 20 months on average. Multiplying that lifespan by the monthly revenue per user gives revenue LTV, and applying gross margin converts it to the profit a customer is actually worth. The profit figure is the honest number to compare against acquisition cost.
Worked example
At $60 monthly ARPU, an 80% gross margin and 5% monthly churn: average lifespan is 1 ÷ 0.05 = 20 months. Revenue LTV is 60 × 20 = $1,200, and profit LTV is $1,200 × 80% = $960.
Frequently asked questions
Why is lifespan 1 divided by churn?
If a fixed fraction of customers leaves each month, the average time before an individual customer churns is the reciprocal of that fraction. A 5% monthly churn means an average lifespan of 1 ÷ 0.05 = 20 months.
Should LTV use revenue or profit?
Use profit-based LTV when comparing against acquisition cost, since spending real money to earn margin dollars is the honest comparison. This calculator shows both so you can see the gap your gross margin creates.
How does LTV relate to CAC?
A common healthy benchmark is an LTV-to-CAC ratio of about 3:1. If it costs more to acquire a customer than their margin-adjusted LTV, each new customer destroys value rather than creating it.
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Educational estimate, not financial advice.