Customer LTV Calculator
Calculate Customer Lifetime Value from average revenue per user, churn rate, and gross margin.
Results are for general guidance only — not professional advice. Learn more.
How to use this tool
Enter your three key metrics to calculate customer lifetime value:
- ARPU: The average amount each customer pays you per month.
- Monthly Churn Rate: The percentage of customers who cancel each month. If you lose 3 in 100 customers per month, enter 3.
- Gross Margin: The percentage of revenue retained after direct costs. A SaaS business typically has 70–80% gross margin.
The calculator will show you full LTV (including margin), raw revenue LTV, and the implied average customer lifetime in months.
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Frequently asked questions
What is Customer LTV?
Customer Lifetime Value (LTV or CLV) is the total net profit a business expects to earn from a customer over the entire duration of their relationship. It helps you understand how much you can afford to spend to acquire a customer and guides decisions on retention investment.
How is LTV calculated?
The most common formula is: LTV = (Average Revenue Per User / Monthly Churn Rate) × Gross Margin. For example, if ARPU is £50, monthly churn is 5%, and gross margin is 70%, then LTV = (£50 / 0.05) × 0.70 = £700.
What is a good LTV:CAC ratio?
A ratio of 3:1 is generally considered healthy — meaning for every £1 spent acquiring a customer you earn £3 in lifetime value. Below 3:1 suggests your acquisition costs may be too high or your retention too low. Above 5:1 might indicate you are under-investing in growth.
How does churn affect LTV?
Churn has a dramatic impact on LTV because customer lifetime is the inverse of churn rate (1 / churn). A business with 2% monthly churn has an average customer lifetime of 50 months, while one with 10% churn only retains customers for 10 months on average. Small improvements in churn compound significantly over time.