How to calculate customer lifetime value (LTV)
Use one matching period for revenue, margin, and churn or retention. The result breaks out gross margin per customer, average customer lifespan, the formula, and the assumptions behind the estimate. Enter Customer acquisition cost (CAC) - optional to show the LTV:CAC ratio.
- Choose Monthly, Quarterly, Annual, or Custom period in Period. Apply that period to every revenue and rate figure.
- Select a label in Currency symbol. The label appears beside amounts; it does not convert them.
- Enter Average revenue per customer (ARPU), per period and Gross margin (%).
- Select Churn rate or Retention rate in I know my..., then enter the percentage for the same period.
- Enter Customer acquisition cost (CAC) - optional when you want the LTV:CAC ratio, then select Calculate LTV.
- Keep the plain-text result with Copy result or Download result (.txt).
How the customer lifetime value formula works
The calculator multiplies ARPU by gross margin to get gross margin per customer for the period. It then multiplies that amount by average customer lifespan. Lifespan is 1 divided by churn rate. With Retention rate selected, the calculator first converts it with Churn rate = 100% − Retention rate.
Gross margin per customer per period = ARPU × Gross margin
Average customer lifespan = 1 ÷ Churn rate
LTV = Gross margin per customer per period × Average customer lifespan
ARPU: $50.00
Gross margin: 80%
Churn rate: 5%
Gross margin per customer per period: $40.00
Average customer lifespan: 20 periods
Estimated LTV: $800.00
CAC: $200.00, LTV:CAC ratio: 4.00:1With these values, the calculator reports $40.00 of gross margin per customer per period, a 20-period lifespan, and an estimated LTV of $800.00. Period and Currency symbol label the output and do not change the arithmetic.
What the result includes
The result shows estimated customer lifetime value, average customer lifespan in periods, gross margin per customer per period, and the assumptions used. The LTV:CAC ratio appears when Customer acquisition cost (CAC) - optional is above 0. A blank CAC or a value of 0 leaves LTV visible and skips the ratio.
Copy result places a plain-text summary on the clipboard. If copying fails, the result shows a manual-copy message. Download result (.txt) saves the same summary as a .txt file.
What churn, retention, and CAC change
Average revenue per customer must be greater than 0. Gross margin accepts 0 through 100. Churn must be greater than 0 and no more than 100. Retention accepts 0 through values below 100. Customer acquisition cost (CAC) - optional may be blank or 0 and above.
- A CAC of 0 produces a warning and leaves the LTV:CAC ratio uncalculated. CAC does not change LTV.
- A churn rate below 1% produces a warning because the calculated lifespan becomes long and small rate changes have a large effect on LTV.
- The estimate assumes constant churn and margin. It does not include discounting, cohort differences, seasonality, or acquisition strategy.
Where customer lifetime value calculations come up
Enter average monthly revenue, margin, and monthly churn when those are the figures available. Select Retention rate when the tracked figure is the share of customers kept during the period.
Add Customer acquisition cost (CAC) - optional to compare the estimate with the acquisition cost entered in the same calculation. The copied summary includes the assumptions and result.
When to use a related business calculator
Use the Business Calculators category for a wider business metric. Choose the Churn Rate Calculator to calculate churn from starting, lost, gained, and ending customers or revenue before using that rate here.
Use the Customer Acquisition Cost (CAC) Calculator to calculate CAC from sales and marketing spend plus new customers. Choose the SaaS Metrics Calculator for several metrics from one SaaS period, including LTV, churn, revenue, burn, and runway.
Frequently asked questions
What is the formula for customer lifetime value?
LTV equals gross margin per customer per period multiplied by average customer lifespan. The calculator gets those values from Average revenue per customer (ARPU), per period, Gross margin (%), and Churn rate.
Can I use retention rate instead of churn rate?
Yes, select Retention rate in I know my... and enter a value below 100 for the same period. The calculator converts it to churn by subtracting retention from 100%.
Why is my LTV:CAC ratio missing?
The LTV:CAC ratio appears only when Customer acquisition cost (CAC) - optional is entered above 0. A blank CAC or a CAC of 0 leaves LTV visible and skips the ratio.
Does the customer lifetime value calculator use live customer data?
No. It calculates from the figures you enter and does not fetch billing, CRM, or live customer records. The calculator script performs the calculation in the browser and does not send the entered calculation values to a server.