Free tool · LTV
Customer Lifetime Value Calculator
Lifetime value is the gross profit a customer is worth across the whole relationship — the number that sets the ceiling on what you can afford to spend to acquire them. Enter monthly revenue per customer, gross margin, and average lifespan to see LTV.
LTV is easy to inflate — and easy to misuse
The formula is one line, but the inputs are assumptions. Whether LTV is a useful planning number or a vanity figure comes down to how honest those assumptions are.
Use margin, not revenue
The most common LTV error is multiplying revenue by lifespan and stopping there. A customer paying $100/month at a 40% gross margin is worth $40/month to you, not $100 — value the profit you keep, never the top line.
Lifespan is a guess until you measure churn
Average lifespan comes from churn: a customer who churns at 5% per month stays about 20 months on average. Estimating lifespan directly invites optimism; derive it from your actual monthly churn rate instead.
A number to act on, not admire
LTV only earns its keep next to acquisition cost. A high LTV is irrelevant if it costs more than that to win the customer — the point of LTV is to set the ceiling on what you can profitably pay to acquire.
Calculate customer LTV
Enter monthly revenue per customer, gross margin, and average lifespan.
Average monthly recurring or repeat revenue from one customer (ARPU).
Share of revenue left after the direct cost of delivering the product or service.
How many months the average customer stays. Roughly 1 ÷ your monthly churn rate.
Waiting for input
Enter monthly revenue per customer, gross margin, and average lifespan to see lifetime value.
LTV = monthly revenue × gross margin% × lifespan (months). Lifespan ≈ 1 ÷ monthly churn rate.
What is customer lifetime value?
Customer lifetime value (LTV, sometimes CLV or CLTV) is the total gross profit a customer is expected to generate across the entire relationship. It turns recurring revenue and retention into a single forward-looking number you can plan against.
Because it captures both how much a customer pays and how long they stay, LTV is the natural counterpart to acquisition cost: together they tell you whether your growth is profitable per customer, not just whether it is fast.
Calculate LTV
LTV = Monthly revenue × Gross margin% × Lifespan (months)
$120/month × 60% margin × 24 months → LTV = 120 × 0.60 × 24 = $1,728
Derive lifespan from churn
Lifespan (months) = 1 ÷ Monthly churn rate
A 4% monthly churn rate → 1 ÷ 0.04 = 25 months average lifespan
How to use this LTV calculator
Three inputs, one profit-aware number.
Enter monthly revenue per customer
Use average revenue per account (ARPU) for the segment — recurring subscription value, or average repeat spend per month for non-subscription models.
Use your gross margin, not revenue
Apply the gross margin on that revenue so LTV reflects the profit you actually keep after the cost of delivery. Skipping this is the most common way LTV gets overstated.
Set lifespan from churn
If you do not have a measured lifespan, divide one by your monthly churn rate. A 5% monthly churn implies roughly a 20-month average lifespan.
Should LTV use revenue or gross margin?
Gross margin. LTV is meant to represent the profit a customer brings, not the top-line revenue they pay. Multiplying revenue by lifespan without applying margin overstates value — sometimes by 2× or more for low-margin businesses — and leads to overspending on acquisition.
How do I estimate average customer lifespan?
The cleanest method is to derive it from churn: average lifespan in months is roughly one divided by your monthly churn rate. A 5% monthly churn rate implies about a 20-month lifespan. Use a measured churn rate where you have one rather than guessing lifespan directly.
What is a good LTV?
There is no universal target — LTV only means something relative to acquisition cost. The common benchmark is an LTV:CAC ratio of around 3:1, meaning each customer is worth roughly three times what it costs to acquire them. A ratio below 1:1 means you lose money on every customer.
Should I discount LTV for future cash flow?
For long-lived relationships, yes. Profit earned years from now is worth less today, so sophisticated models apply a discount rate to future months. This simple calculator gives undiscounted LTV, which is fine for short lifespans and quick comparisons; discount it when lifespans run for several years.
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