LTV Calculator
See how much profit one customer brings over their lifetime, and whether that justifies what you pay to acquire them.
Customer lifetime value
$1,600
LTV = (average revenue per month × gross margin) ÷ monthly churn. It estimates the total profit one customer brings before they leave. A ratio below 1x means each new customer costs more than they return.
Educational estimate, not legal or financial advice.
How it works
Find your LTV in 3 steps
Enter your average monthly revenue per customer.
Enter your gross margin and your monthly churn rate.
Add your CAC to see your LTV to CAC ratio.
Worked example
$100 a month with 5% churn
Inputs
- Revenue per customer
- $100/mo
- Gross margin
- 80%
- Monthly churn
- 5%
- CAC
- $500
Result
- LTV
- $1,600
- LTV to CAC
- 3.2x
Halving churn would double the value of every customer.
How we got there
Customers pay $100 a month, your gross margin is 80% and 5% of customers cancel each month. Your LTV is $1,600. With a CAC of $500, your LTV to CAC ratio is 3.2x, which is healthy.
Reading your result
What your LTV to CAC ratio means
Good sign
An LTV to CAC ratio of 3x or more.
Red flag
Below 1x: every new customer loses money.
An LTV to CAC ratio of 3x or more is healthy. Below 1x, every new customer costs more than they bring in. Well above 5x can mean you are underinvesting in growth.
Churn has the biggest effect on LTV. Cutting monthly churn in half doubles the value of every customer.
FAQ
LTV questions founders ask
The total gross profit one customer brings in before they stop paying.
Average monthly revenue per customer, multiplied by gross margin, divided by monthly churn.
3x or more is the common benchmark investors use.
LTV should measure profit, not revenue, because revenue you spend to deliver the product is not yours to keep.
Use cautious churn estimates. A short history usually makes churn look lower than it really is.