Customer Lifetime Value (LTV) Calculator
Calculate customer LTV using the subscription model (ARPU × margin ÷ churn) or the traditional ecommerce model (AOV × frequency × lifespan). Includes a cumulative gross profit curve.
Average monthly revenue per user
SaaS: 70–85% · eComm subscriptions: 30–50%
% of customers who cancel each month
The Two LTV Formulas
Subscription / SaaS: LTV = (Monthly ARPU × Gross Margin %) ÷ Monthly Churn Rate. A customer paying $49/month with 70% margin and 3% monthly churn has an LTV of ($49 × 0.70) ÷ 0.03 = $1,143.
Traditional Ecommerce: LTV = Average Order Value × Purchase Frequency × Customer Lifespan × Gross Margin. A customer spending $85 per order, 3× per year, over 3 years with 50% margins: $85 × 3 × 3 × 0.50 = $382.50.
Always use gross profit LTV (not revenue LTV) when evaluating whether your CPA or CAC is sustainable. Revenue LTV will make your economics look better than they are.
Why Churn Rate Is the Most Important LTV Input
In the subscription formula, churn is the denominator — small changes produce dramatic LTV swings. Cutting monthly churn from 5% to 2.5% doubles your LTV. This is why SaaS companies obsess over churn above almost every other metric. A company with low ARPU but exceptional retention can have a higher LTV than a company with high ARPU and poor retention.
For the full customer economics picture including CAC payback and LTV:CAC ratio, use the Unit Economics Calculator. To see what CPA you can afford given your LTV, use the CPA Calculator.
Frequently Asked Questions
Should LTV be based on revenue or gross profit?
Always use gross profit LTV for unit economics decisions. Revenue LTV ignores the cost to serve the customer — it overstates true value. Gross profit LTV = the actual cash contribution of each customer. Use this to determine max CAC, target CPA, and LTV:CAC ratio. Revenue LTV is only useful for top-line reporting, not for evaluating acquisition economics.
How do I increase customer LTV?
Three levers: (1) Reduce churn — the highest-ROI LTV improvement for subscription businesses. Even small churn reductions compound significantly. (2) Increase ARPU — through upsells, cross-sells, expansion revenue, or price increases. (3) Extend lifespan — through better onboarding, CS, and product engagement. For traditional ecommerce: increase purchase frequency through loyalty programs, email, and repeat purchase incentives.
What is the difference between LTV and CLV?
LTV (Lifetime Value) and CLV (Customer Lifetime Value) are the same metric — different acronyms used interchangeably across industries. Some contexts use CLTV (Customer Lifetime Value) to be more precise. All refer to the total economic value a customer contributes over their relationship with your business.
Powered by HumanCalculations — free online calculators