LTV Calculator (Customer Lifetime Value)
Calculate what an average customer is worth over their whole lifetime. Enter ARPA, gross margin, and monthly churn to get LTV, average lifetime in months, and a benchmark against CAC.
Customer Acquisition Cost (CAC)
How much you spend, on average, to win one new customer.
Customer Lifetime Value (LTV)
The total gross profit you earn from an average customer before they churn.
LTV : CAC Ratio
The single most-watched SaaS efficiency number. 3:1 is the healthy benchmark.
MRR & ARR
Monthly and annual recurring revenue from your customer base.
Churn Rate
The percentage of customers you lose in a period — and the lifetime it implies.
Customer Retention Rate
The percentage of customers you kept, excluding new ones you added.
SaaS Valuation
A revenue-multiple estimate. Faster growth earns a higher multiple.
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The SaaS LTV Formula
Say a customer pays $50/month, your gross margin is 80%, and monthly churn is 3%. Average lifetime is 1 ÷ 0.03 ≈ 33 months. LTV = $50 × 0.80 × 33 ≈ $1,320. That's the profit, not revenue, one customer returns.
Why gross margin, not revenue
Revenue LTV inflates the number by ignoring the cost of serving a customer — hosting, support, and payment processing. Margin-based LTV is the honest figure, and it's the only version worth comparing to CAC.
Churn Is the Multiplier
Lifetime is the inverse of churn, so churn moves LTV more than anything else. Watch what happens as you cut monthly churn on that same $50 / 80%-margin customer:
| Monthly churn | Avg lifetime | LTV |
|---|---|---|
| 7% | ~14 months | ~$570 |
| 5% | 20 months | $800 |
| 3% | ~33 months | ~$1,320 |
| 1% | 100 months | $4,000 |
Halving churn more than doubles LTV. That's why retention work usually beats acquisition work for improving unit economics. Measure yours in the churn rate calculator.
Using LTV With CAC
LTV alone doesn't tell you if the business works — it has to clear your acquisition cost. The benchmark is LTV : CAC of at least 3 : 1. At 3:1 or better you're acquiring profitably with room to reinvest; below it, fix retention or acquisition cost before scaling spend.
Built and tested by Alston Antony — AI SEO strategist, reviewer of 500+ SaaS tools, and runner of a 15,000-member lifetime-deal community. Free founder math, no analytics subscription required.
Frequently Asked Questions
What is the LTV formula for SaaS?
The standard gross-margin LTV formula is: LTV = (monthly ARPA × gross margin %) ÷ monthly churn rate %. ARPA is average revenue per account per month, gross margin strips out the cost of serving the customer, and dividing by churn converts a monthly figure into a full lifetime. Using gross margin (not raw revenue) gives you the profit a customer actually contributes.
Should I use revenue or gross margin for LTV?
Gross margin. Revenue-based LTV overstates a customer's value because it ignores what it costs to serve them (hosting, support, payment fees). Margin-based LTV is the number to compare against CAC — it reflects real contribution, which is what determines whether acquisition is profitable.
How do I increase customer LTV?
Three levers, in order of impact: cut churn (it multiplies lifetime), raise ARPA through upsells, expansion, and annual plans, and improve gross margin by making delivery more efficient. Reducing monthly churn from 5% to 3% nearly doubles average lifetime — usually the single highest-leverage move.
What is a good LTV to CAC ratio?
3 : 1 is the benchmark. Your lifetime value should be at least three times what it costs to acquire a customer. Below that, acquisition is inefficient; far above it (5 : 1+), you're likely under-investing and could grow faster. Check yours in the LTV : CAC tab.
Is this LTV calculator free?
Yes — free, no signup, no limits. Everything is computed in your browser and no numbers are stored or transmitted.