Customer Lifetime Value Calculator
What a customer is worth over their lifetime.
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This customer lifetime value calculator estimates how much gross profit an average customer brings before they leave. Enter average monthly revenue per customer, gross margin and monthly churn rate to get the lifetime value (LTV), the average customer lifetime and, with your customer acquisition cost, the LTV to CAC ratio.
What is a Customer Lifetime Value Calculator?
Customer lifetime value (LTV or CLV) is the total gross profit a business expects from an average customer over the whole relationship. It tells you how much you can afford to spend to win a customer and still make money.
For subscription businesses, LTV is usually estimated from monthly revenue per customer, gross margin and churn rate: the lower the churn, the longer customers stay and the higher their value. Comparing LTV with customer acquisition cost (the LTV:CAC ratio) is a core test of a healthy business model.
How does the Customer Lifetime Value Calculator work?
Monthly gross profit per customer is revenue times gross margin. The average lifetime is 1 divided by the monthly churn rate. LTV is monthly gross profit divided by churn. The discounted version also allows for the time value of money using your yearly discount rate. LTV:CAC divides LTV by acquisition cost.
Because LTV divides by churn, it is very sensitive to that one input. Cutting monthly churn from 3% to 2% raises the average lifetime from about 33 months to 50 months and lifts LTV by half, which is why retention work often pays off more than extra marketing.
How to use the Customer Lifetime Value Calculator step by step
- Choose your currency.
- Enter average monthly revenue per customer.
- Enter gross margin.
- Enter the monthly churn rate.
- Optionally add CAC and a discount rate.
- Read LTV, lifetime and LTV:CAC.
Customer Lifetime Value Calculator example with real numbers
A subscription app earns $50 a month per customer at a 70% gross margin, loses 3% of customers each month and spends $200 to acquire each one.
| Example input | Value |
|---|---|
| Currency | US dollar ($) |
| Average monthly revenue per customer | 50 |
| Gross margin | 70% |
| Monthly churn rate | 3% |
| Customer acquisition cost (optional) | 200 |
| Yearly discount rate (optional) | 10% |
| Example output | Value |
|---|---|
| Customer lifetime value | $1,166.67 |
| Average customer lifetime | 33.3 months (2.8 years) |
| Monthly gross profit per customer | $35.00 |
| Lifetime revenue per customer | $1,666.67 |
| Discounted LTV | $929.03 |
| LTV:CAC ratio | 5.83 : 1 (healthy) |
| Months to recover CAC | 5.7 |
The customer lifetime value calculator shows an LTV of $1,166.67, with customers staying about 33.3 months (2.8 years), for an LTV:CAC of 5.83 : 1 (healthy).
Key features of this Customer Lifetime Value Calculator
- Margin-based LTV
- Average lifetime
- Discounted LTV
- LTV:CAC ratio
- CAC recovery months
Who should use the Customer Lifetime Value Calculator?
Who is this Customer Lifetime Value Calculator for?
- SaaS founders
- Subscription and membership businesses
- E-commerce marketers
- Investors reviewing startups
Practical use cases
- Setting a maximum CAC
- Pitching unit economics
- Testing the value of reducing churn
- Comparing customer segments
Key benefits
- Practical: profit-based LTV.
- Complete: LTV:CAC included.
- Insightful: churn sensitivity.
- Private: runs in your browser.
Tips for better results
- Use gross margin, not revenue, for LTV.
- Small cuts in churn raise LTV a lot.
- Calculate LTV by segment or plan.
- Aim for an LTV:CAC of about 3:1.
Common mistakes to avoid
- Using revenue instead of gross profit.
- Using annual churn as monthly churn.
- Ignoring discounting for long lifetimes.
- Averaging very different customer groups.
Limitations of this Customer Lifetime Value Calculator
- Constant churn and revenue are assumed.
- Expansion revenue is ignored.
- Early-stage churn data may be unreliable.
Customer Lifetime Value Calculator vs other ways to calculate
| LTV:CAC | What it suggests |
|---|---|
| Below 1:1 | Losing money on each customer |
| 1:1 to 3:1 | Thin returns on acquisition |
| About 3:1 | Healthy balance |
| Above 5:1 | Possibly under-investing in growth |
To work out acquisition cost, use the CAC calculator. To measure churn, try the churn rate calculator.
Privacy and data handling
This Customer Lifetime Value Calculator runs entirely in your browser. The numbers you type are not sent to Qorico or stored on any server, and nothing is saved after you close the page. The Copy and Download buttons create the result on your own device. If the page has analytics turned on, it may count that a calculation happened, but it does not record the values you entered.
Customer Lifetime Value Calculator FAQs
How do I calculate customer lifetime value?
Multiply monthly revenue per customer by gross margin and divide by the monthly churn rate.
What is a good LTV:CAC ratio?
About 3:1 is a widely used benchmark.
Why use gross margin?
Because LTV should measure profit, not just revenue.
How does churn affect LTV?
Lower churn means a longer lifetime and higher LTV. Halving churn doubles LTV in this model.
What is discounted LTV?
LTV adjusted for the time value of money, so future profit counts for less.
Can I use it for e-commerce?
Yes. Use average monthly spend and an estimate of how many customers stop buying each month.
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Sources and references
We checked the method and the current figures used in this Customer Lifetime Value Calculator against these official and primary sources:
Written and reviewed by the Qorico Team
