LTV Calculator

Customer Lifetime Value, or LTV, estimates how much gross profit a customer will generate over their entire relationship with you, and this calculator works it out the SaaS way. LTV is the counterpart to acquisition cost: knowing what a customer is worth over their lifetime is what tells you how much you can afford to spend winning them and still profit. For subscription businesses the calculation has a neat form, because the average customer lifetime is the inverse of the churn rate, a 2 percent monthly churn implies an average lifetime of fifty months. Multiplying that lifetime by the monthly revenue each customer brings, and by your gross margin so you count profit rather than revenue, gives the lifetime value. This calculator captures all three drivers. You enter the average revenue per account per month, your gross margin percentage, and your monthly churn rate, and the calculator returns the LTV, the expected average customer lifetime in months, and the inputs for reference. The results update as you type, so you can see how reducing churn or lifting margin dramatically increases lifetime value. Use it to size your acquisition budget, to feed the LTV-to-CAC ratio, or to quantify the payoff from improving retention. A few notes: applying gross margin rather than revenue keeps LTV honest, since servicing customers has a cost; using monthly churn and monthly revenue keeps the units consistent, and the lifetime comes out in months; and because LTV depends on the inverse of churn, small reductions in churn produce outsized gains in lifetime value, which is why retention is so prized in SaaS. Compare LTV against CAC to judge whether your unit economics work, aiming for a comfortable multiple of value over the cost of acquisition.

LTV = (ARPA x gross margin %) / monthly churn rate. Average lifetime = 1 / churn. Uses gross profit, not revenue. Lower churn sharply raises LTV.