Paritian

Work & Productivity

Customer Lifetime Value (LTV) Calculator

How much gross profit an average subscriber brings in before leaving, how long they stay, and how that compares with what it costs to acquire them.

Results

Customer lifetime value (LTV) 700.00
Average customer lifetime 33.3 months
LTV to CAC ratio 2.33 ×
Months to recover the CAC 14.3 months
How it changes
Customer lifetime value (LTV)Monthly churn (customers who leave) 1.0 – 9.0. Customer lifetime value (LTV): 2100 → 233.333; 3 × CAC (a common target): 900 → 900Customer lifetime value (LTV)3 × CAC (a common target)050010001500200025002.04.06.08.0Monthly churn (customers who leave) (%)

The dashed line marks the value you entered.

What this tool does

With a constant monthly churn the average customer stays 1 ÷ churn months — 3 % churn means about 33 months — so lifetime value is the monthly gross profit divided by churn. That makes churn the most powerful lever: halving it doubles LTV. A ratio of LTV to acquisition cost of about 3 is a widely quoted target, and months to recover the CAC tells you how long the cash is tied up. Real churn is usually higher in the first months, so this simple model flatters new businesses.

Formula

LTV = ARPU × margin ÷ churn · lifetime = 1 ÷ churn · payback = CAC ÷ (ARPU × margin)

Variables

SymbolMeaningUnit
arMonthly revenue per customer—
gmGross margin%
chMonthly churn (customers who leave)%
caCost to acquire a customer (CAC)—
LTVCustomer lifetime value (LTV)—
LTAverage customer lifetimemonths
RALTV to CAC ratio×
PBMonths to recover the CACmonths

Worked example

  • Monthly revenue per customer30
  • Gross margin70 %
  • Monthly churn (customers who leave)3 %
  • Cost to acquire a customer (CAC)300
  • Customer lifetime value (LTV)700.00
  • Average customer lifetime33.3 months
  • LTV to CAC ratio2.33 ×
  • Months to recover the CAC14.3 months

Limitations

  • The result is an estimate based only on the values you type. Real situations often include factors this calculator does not know about.
  • The tool works with whatever currency you use for the inputs; it does not convert between currencies.