Customer LTV Calculator — Lifetime Value Tool
Calculate Customer Lifetime Value from ARPU, monthly churn rate, and gross margin. Get gross and net LTV, LTV:CAC ratio with benchmark rating, and a churn sensitivity table showing how LTV changes across different churn rates.
How to Use Customer LTV Calculator — Lifetime Value Tool
How to Use the Customer LTV Calculator
Step 1: Enter Your Core Inputs
- ARPU — Average Revenue Per User per month (total MRR ÷ total customers)
- Monthly Churn Rate — percentage of customers who cancel each month (e.g. enter 2 for 2%)
- Gross Margin — your software gross margin as a percentage (typically 65–85% for SaaS)
Step 2: Add CAC for LTV:CAC Analysis (Optional)
Enter your Customer Acquisition Cost to unlock the LTV:CAC ratio card and add a ratio column to the sensitivity table. CAC is typically calculated as total sales and marketing spend divided by new customers acquired in a period.
Step 3: Read the Results
- Customer Lifetime — average months a customer stays before churning (1 ÷ churn rate)
- Gross LTV — ARPU × Customer Lifetime (revenue before costs)
- Net LTV — Gross LTV × Gross Margin (profit contribution per customer)
- LTV:CAC Ratio — Net LTV ÷ CAC; target ≥ 3x for healthy unit economics
Step 4: Use the Sensitivity Table
The table shows how LTV and LTV:CAC change across churn rates from 0.5% to 15%. Your current rate is highlighted in blue. Use this to quantify the value of reducing churn — each row shows the exact LTV improvement from halving or quartering your churn rate.
Tips
- Use presets (SMB SaaS, Enterprise SaaS, B2C SaaS) to benchmark against typical scenarios
- A 3:1 LTV:CAC is the minimum viable threshold; best-in-class companies target 5:1 or higher
- Gross margin has a linear impact on net LTV — a 10-point margin improvement raises net LTV by ~14% at 70% margin
Frequently Asked Questions
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