Customer lifetime value calculator
LTV is a unit-economics metric, calculated as (ARPA × Gross margin) ÷ Revenue churn rate, both in the same period unit. Extremely sensitive to the churn input; unstable at low churn.
- Formula
- (ARPA × Gross margin) ÷ Revenue churn rate, both in the same period unit
Customer lifetime value (LTV)
LTV = (ARPA × Gross margin) ÷ Revenue churn rate$
%
%
Customer lifetime value
$15,600
How it’s worked out
- 1Gross profit per customer per month$400 × 78.0%$312
- 2Expected lifetime1 ÷ 2.00%50.0 months
- 3LTV$312 ÷ 2.00%$15,600
Runs in your browser; nothing you type is sent anywhere. Amounts in US dollars.
How to read it
LTV estimates the gross profit a customer will contribute over its life: monthly gross profit per customer divided by the monthly churn rate.
It is sensitive to churn: halving churn doubles LTV, which is why early estimates on thin data should be treated as ranges.
Common mistakes
- Using revenue instead of gross profit per customer.
- Mixing an annual churn rate with a monthly ARPA.
Questions
- What if churn is zero?
- With zero churn the formula divides by zero. Cap the customer lifetime — often at five years — rather than reporting an infinite value.
- Revenue or gross profit?
- Gross profit, not revenue. LTV built on revenue overstates what a customer is worth by the cost of serving them.
Read it with
The metrics read alongside this one, and the terms it is confused with.
- LTV to CAC calculatorLTV:CAC is a unit-economics metric. It has no single agreed formula — state the inputs.Calculator
- CAC calculatorCAC is a unit-economics metric, calculated as Sales & marketing spend ÷ new customers.Calculator
- Logo churn calculatorLogo churn is a recurring-revenue metric, calculated as Customers lost ÷ starting customers.Calculator
- LTVLTV is a unit-economics metric, calculated as (ARPA × Gross margin) ÷ Revenue churn rate, both in the same period unit.Term
The formula is the one the glossary states, and the arithmetic is unit-tested. A ratio with nothing to divide by shows a dash — undefined is not zero. General information, not financial advice.