How This Calculator Works
LTV turns the inputs into a visible formula-based estimate. Use it to compare margin, funnel movement, CAC, revenue, cost, and scenario planning before changing pricing, spend, or operations.
Use the LTV calculator to estimate customer lifetime value from average revenue per account, gross margin, and monthly churn rate.
A simple subscription LTV estimate multiplies gross profit per month by expected customer lifetime.
Formula
LTV = monthly revenue per customer x gross margin / monthly churn rate.
Example Calculation
$49 ARPU, 75% gross margin, and 4% churn gives an LTV of about $919.
When to Use This Calculator
- Compare CAC and LTV
- Estimate payback room
- Model churn impact
Practical Scenarios
- Run the calculator before changing pricing, spend, hiring, or targets so margin and cash impact are visible. Use case: Compare CAC and LTV.
- Compare conservative, base, and optimistic assumptions when revenue, conversion, CAC, or cost can move quickly. Start with LTV, then compare the changed result with the original.
- Use related business calculators when one metric affects the wider funnel, payback, runway, or profit picture. This is especially useful when you need to model churn impact.
Tips
- Use gross margin, not revenue alone
- Churn estimates should match customer segment
- Low churn has a large effect on LTV
Common Mistakes
- Ignoring gross margin
- Using annual churn in a monthly formula
- Averaging very different customer segments
- Reading revenue as profit before fees, refunds, discounts, labor, taxes, and fulfillment costs are included.
- Mixing monthly, annual, cohort, and campaign numbers in the same calculation.
Assumptions and Limitations
The LTV Calculator is strongest when revenue, cost, margin, period, and funnel assumptions all use the same reporting window. Review the formula, assumptions, and related calculators before using the result in a decision.
- Refunds, chargebacks, taxes, payment fees, labor, seasonality, and contracts can change real outcomes.
- The result is a planning estimate, not accounting, tax, legal, or professional advice.
- Verify assumptions against current records before changing prices, budgets, or strategy.
LTV explains LTV, customer lifetime value, gross margin and churn through decision context such as margin, period, funnel quality, and cash impact.
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