Free tool

LTV calculator

Estimate customer lifetime value from revenue per customer, gross margin, and churn, then see how it compares with acquisition cost through the LTV:CAC ratio and CAC payback period.

I know my

Revenue per customer

Average monthly revenue per customer (ARPA / ARPU)

Gross margin

Share of revenue left after the cost of serving the customer

Monthly churn rate

Share of customers lost each month

Customer acquisition cost

Optional. Sales and marketing cost per new customer

Annual churn? Divide it by 12 first. Leave CAC blank if you only want lifetime value.

Customer lifetime value

$5,333.33

$200.00 × 80% × 33.3 months = $5,333.33

Customer lifespan: 33.3 months
Gross profit / month: $160.00
LTV:CAC: 3.56 : 1
CAC payback: 9.4 months

The LTV formula

Margin per month, times how long customers stay.

Customer lifetime value is the gross profit a customer generates over their relationship with you. For a subscription business it comes from three numbers: what a customer pays each month, how much of that is margin, and how long they stay, which churn tells you.

Customer lifespan

Lifespan (months) = 1 ÷ Monthly churn rate

A 3% monthly churn means the average customer stays about 33 months.

Lifetime value

LTV = Revenue per month × Gross margin × Lifespan

Gross profit per month multiplied by the months a customer stays.

LTV:CAC

LTV:CAC = LTV ÷ Customer acquisition cost

How many dollars of lifetime gross profit each acquisition dollar buys.

CAC payback

Payback (months) = CAC ÷ (Revenue per month × Gross margin)

How long until a new customer has repaid the cost of acquiring them.

If you measure churn annually, divide by 12 to get a monthly rate before using it here. If you would rather skip churn, switch the calculator to lifespan and enter the average number of months customers stay.

Worked examples

What the numbers look like in practice.

Three subscription businesses with different price points and churn. The last column is the lifetime value each set of inputs produces.

Scenario	Revenue / month	Gross margin	Monthly churn	LTV
$200/mo SaaS plan with typical mid-market churn	$200	80%	3%	$5,333
$49/mo self-serve plan with higher churn	$49	85%	5%	$833
$1,200/mo enterprise seat with low churn	$1,200	75%	1%	$90,000

Beyond the number

What LTV tells you, and what it doesn't.

Churn is an average, not a promise

The formula assumes every month carries the same churn rate. Real cohorts usually lose more customers early and fewer later, and a single big account leaving can move a small company's churn by a point. Treat the result as a planning estimate and replace it with cohort data as soon as you have enough history.

Use gross margin, not revenue

Lifetime value built on revenue overstates what a customer is worth by the cost of serving them: hosting, support, payment processing, onboarding. Gross-margin LTV is the number that can honestly be compared with acquisition cost, because both are measured in profit dollars.

LTV only matters next to CAC, by channel

A blended LTV:CAC hides which channels bring customers who stay. Cometly ties each customer's Stripe revenue back to the campaign and ad that acquired them, and account journeys show how that revenue grows or churns over time.

Need the CAC side first? The CPA calculator gives cost per customer from spend and conversions.

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FAQ

Lifetime value questions, answered.

The formula, the ratio everyone quotes, payback period, and the assumptions that make or break the estimate.

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What is customer lifetime value (LTV)?

Customer lifetime value is the total gross profit a business expects to earn from a customer over the whole time they remain a customer. It tells you how much you can afford to spend to acquire a customer and still come out ahead.

How do you calculate LTV?

For a subscription business, multiply monthly revenue per customer by gross margin to get gross profit per month, then multiply by the average customer lifespan, which is 1 divided by the monthly churn rate. A customer paying $200 a month at an 80% margin with 3% monthly churn is worth 200 × 0.8 × (1 ÷ 0.03) = $5,333.

What is a good LTV:CAC ratio?

3:1 is the most commonly cited benchmark for SaaS, meaning a customer returns three dollars of lifetime gross profit for every dollar spent acquiring them. Below about 1:1 you lose money on every customer. A very high ratio can also be a signal that you are underinvesting in growth. The right target depends on your payback period and how much capital you have to wait for it.

What is CAC payback period?

The number of months it takes for a new customer's gross profit to repay the cost of acquiring them. Payback = CAC ÷ (monthly revenue per customer × gross margin). A $1,500 CAC on a customer producing $160 of gross profit a month pays back in about 9.4 months. Shorter payback means growth consumes less cash.

I only know annual churn. How do I use it?

Divide the annual churn rate by 12 for a rough monthly rate. A 30% annual churn is roughly 2.5% a month. That approximation is close enough for planning; the exact conversion is 1 − (1 − annual churn)^(1/12), which gives 2.9% for the same 30%.

What is the difference between LTV and CLV?

Nothing. Lifetime value, customer lifetime value, LTV, and CLV all refer to the same idea. Some teams reserve CLV for the revenue version and LTV for the margin version, but there is no standard, so always check which costs a given number includes.

Should LTV include expansion revenue?

If customers reliably upgrade or add seats over time, the simple formula understates their value, and you can raise the revenue-per-month input to the average across the customer's life rather than the starting price. Be careful to use the same basis when you compare channels, since some channels bring customers who expand and others bring customers who do not.

How much does churn affect LTV?

More than any other input. Because lifespan is 1 divided by churn, cutting monthly churn from 4% to 2% doubles the average lifespan and doubles LTV, while cutting it from 2% to 1% doubles it again. Small retention improvements are usually worth far more than equivalent improvements in acquisition cost.

Acquisition is a cost.
Lifetime value is the result.

Cometly ties every customer's Stripe revenue back to the ad that acquired them, so LTV:CAC becomes a number you can see by channel, campaign, and ad.

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