How to use the customer lifetime value calculator
Customer lifetime value is the profit one customer leaves behind before they churn. It only means something next to what you paid to win that customer, which is why it is the starting point for deciding whether to spend more on acquisition.
This calculator uses one formula: LTV = monthly ARPU ร gross margin รท monthly churn rate. Because the reciprocal of churn is the average customer lifespan, that is the same as monthly contribution multiplied by lifespan. The screen shows lifespan and monthly contribution first and then their product, so multiplying the displayed figures by hand gives the same lifetime value. The alternative approach โ order value multiplied by purchase frequency and retention years โ rests on different assumptions, so check which one your team uses.
A churn rate of zero cannot be calculated. The average lifespan becomes infinite, so the calculator shows a message instead of a result. Even when churn is very low, entering the smallest rate you have actually observed keeps the estimate honest. Add your acquisition cost and the LTV to CAC ratio appears as well.
This is a planning estimate based only on the values entered. It does not discount future cash flows or model upsell and cross-sell. Written as of September 2026.
Frequently asked questions
Hosting, support and payment processing keep costing money for as long as the customer stays. Stripping them out leaves what the business actually keeps, while a revenue-based lifetime value overstates it.
Subscription businesses commonly aim for at least 3x. A high ratio can still strain cash if the money comes back slowly, so read it alongside the CAC payback period.