Customer Lifetime Value Calculator
Calculate how much revenue you can expect from each customer over their entire relationship with your business.
Calculate Customer LTV
Your MRR divided by number of customers
Percentage of customers who cancel each month
Leave at 100% for revenue-based LTV, or enter your gross margin for profit-based LTV
The Formula
This is the simple LTV formula. It assumes constant churn and ARPA over time, which works well for most SaaS businesses.
The inverse of churn rate gives you the average number of months a customer stays. For example, 5% monthly churn = 20 month average lifetime.
What's a Good LTV?
LTV on its own doesn't tell you much—it depends on what you're paying to acquire customers. The key metric is your LTV:CAC ratio.
Use our CAC/LTV Ratio Calculator to evaluate your unit economics.
Understanding Customer Lifetime Value
Why LTV Matters
Customer Lifetime Value tells you how much you can afford to spend acquiring a customer while still being profitable. If your LTV is $3,000, spending $1,000 to acquire a customer makes sense. Spending $4,000 doesn't.
Revenue LTV vs Gross Margin LTV
Revenue LTV (the default in this calculator) uses your full ARPA. This is useful for understanding total customer value and is the most commonly cited figure.
Gross Margin LTV adjusts for your costs of delivering the service. If your gross margin is 80%, your GM-adjusted LTV is 80% of revenue LTV. This is more accurate for profitability analysis.
For most SaaS businesses with 70-90% gross margins, the difference isn't dramatic, but it matters for companies with significant COGS.
How to Increase LTV
- Reduce churn. The biggest lever. Cutting churn from 5% to 3% increases LTV by 67%.
- Increase ARPA. Upsells, cross-sells, and expansion revenue all boost LTV.
- Annual contracts. Customers on annual plans have lower effective churn.
- Better onboarding. Customers who succeed stick around longer.
- Build habits. Products that become part of daily workflows have higher retention.
Limitations of Simple LTV
The simple formula (ARPA / Churn) assumes:
- Constant churn rate over time (reality: churn often decreases as customers mature)
- Constant ARPA (reality: expansion revenue can increase ARPA over time)
- Infinite time horizon (reality: businesses change, products evolve)
For most purposes, the simple formula works well. For more sophisticated analysis, consider cohort-based LTV calculations that track actual customer behavior over time.
Related Metrics
- LTV:CAC Ratio — the key unit economics metric
- CAC Payback Period — how long to recoup acquisition cost
- Customer Lifetime — average duration of customer relationships
- Net Revenue Retention — LTV factor including expansion
Track LTV automatically
GrowPanel calculates LTV from your actual customer data—with cohort breakdowns showing how LTV varies by signup date, plan, and customer segment.
