Customer LTV Calculator
What's a customer actually worth? LTV, lifetime and LTV:CAC in one go.
Average monthly revenue per customer (ARPU)?
Your monthly price, or total monthly revenue ÷ customers.
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On Customer LTV Calculator specifically
Knowing your LTV is one calculation. Driving better-fit customers who churn less and pay back faster is what a real marketing engine does — that's KAIROS.
See pricingWhat is customer lifetime value (LTV)?
Customer lifetime value (LTV) is the total gross profit you earn from an average customer before they cancel.
Most people quote LTV as revenue. That's the flattering version. The number that actually matters is gross-margin LTV: what's left after the cost of serving the customer. If 30 cents of every dollar goes to keeping an account running, only 70 cents is yours to spend winning the next one. This calculator uses the gross-margin version, because that's the money that pays for growth.
The math is simpler than it sounds. Take monthly revenue per customer, multiply by gross margin, divide by monthly churn. Churn is the lever nobody likes to look at: at 5% monthly churn the average customer stays 20 months; at 3% they stay 33. Same product, 65% more value, just from people sticking around a bit longer.
On its own, LTV is a vanity number. It gets useful the second you put it next to what you pay to acquire a customer. That ratio is the difference between a business and an expensive hobby.
Why this exists
Founders guess at this number all the time. "A customer's worth a few hundred bucks, probably." Then they set an ad budget on that hunch and wonder why the months don't add up. You can't decide what to spend acquiring a customer until you know what one is worth, and you can't know that without churn and margin in the same equation.
The usual trap is revenue LTV. It looks great in a deck and quietly lies to you. A $1,200 "LTV" on a product that costs $400 a year to run is really $800, and if your CAC is $500, you're closer to the edge than the slide let on.
So this gives you the honest number in about fifteen seconds, from three inputs you already know, and tells you straight away whether your unit economics leave room to grow or a problem to fix first.
How it works
- 1Enter ARPU: average monthly revenue per customer. One plan? It's the price. Several? Total monthly revenue divided by paying customers.
- 2Add gross margin. For most software it's 70–90%: revenue minus what it costs to deliver the service (hosting, support, payment fees), as a percentage.
- 3Enter monthly churn: the share of customers who cancel each month. 5 of 100 leaving is 5%.
- 4Optionally add CAC to unlock the LTV:CAC ratio and payback period. Skip it and you still get LTV and average lifetime.
Frequently asked
What's a good LTV:CAC ratio?
Around 3:1 is the healthy benchmark: each customer returns three times what you paid to land them. Below 1:1 you lose money on every sale. Way above 5:1 isn't always a flex either — it often means you're underspending on growth and leaving the market to someone else.
Should LTV use revenue or gross profit?
Gross profit. Revenue LTV ignores the cost of serving the customer, so it overstates what you actually have to reinvest. This tool uses gross-margin LTV on purpose.
How do I calculate monthly churn?
Divide the customers who cancelled in a month by the number you had at the start of it. Started with 200, lost 8? That's 4%.
What is CAC payback?
How many months of gross profit it takes to earn back what you spent acquiring a customer. Under 12 months is generally efficient for SMB SaaS; under 6 is excellent.
My churn is high. What does that do to LTV?
It shortens average lifetime, which drags LTV down fast. Cutting monthly churn from 6% to 4% lifts average lifetime from about 17 months to 25, and LTV climbs with it. Retention is usually the cheapest growth lever you have.
Does this formula work for usage-based pricing?
It's a solid approximation if usage revenue is fairly steady month to month. For products with big expansion or seasonal swings, treat the result as a baseline, not gospel.