LTV Calculator

Calculate customer lifetime value, your LTV:CAC ratio and how many months it takes to earn back acquisition cost.

Your result

Estimates for educational purposes, not financial or legal advice.

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How it works

Lifetime value is the gross profit a customer generates before they leave: monthly revenue per customer times gross margin, divided by monthly churn. Comparing it with CAC tells you whether growth creates or destroys value; 3:1 or better is considered healthy.

Formula

LTV = ARPU × Gross margin ÷ Monthly churn
LTV:CAC = LTV ÷ CAC (3:1 or better is healthy)
CAC payback (months) = CAC ÷ (ARPU × Gross margin)

Frequently asked questions

What LTV:CAC ratio do investors expect?

At least 3:1, with CAC payback under 12–18 months. Much higher than 5:1 can mean you are under-investing in growth.

What if my churn is zero?

The formula gives an infinite lifetime value, which no investor will accept. Use a conservative churn of at least 1% a month, or cap lifetime at 3–5 years.

Should I use revenue or gross margin for LTV?

Gross margin. Revenue-based LTV overstates value, especially for businesses with significant delivery or hosting costs.

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