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LTV Calculator

Average revenue, gross margin, and churn rate produce lifetime value. Enter CAC to get the ratio investors and CFOs ask about first.

Free toolsUnit EconomicsReviewed September 2026

Input basis

Switching converts the values you've already entered.

Revenue, margin, and churn

Recurring revenue per customer, before any costs.

Revenue left after cost of goods or cost of service.

Share of customers lost each month.

LTV to CACOptional. Compares lifetime value with what a customer costs to win.

Fully loaded sales and marketing cost per new customer.

Lifetime value

–

Gross profit over the expected customer lifetime

Expected lifetime
–
1 ÷ churn
Lifetime revenue
–
Before margin
LTV : CAC
–
Needs CAC
Time to recover CAC
–
Needs CAC

Runs entirely in your browser. Nothing you enter is stored or sent anywhere. Last reviewed September 2026.

How lifetime value is built, and how to read the ratio

Lifetime value is the gross profit a customer generates before they leave. The simplest version needs three numbers: what a customer pays per period, what share of that is gross margin, and the churn rate. Revenue times margin gives gross profit per period. One divided by churn gives the expected number of periods a customer stays. Multiply them and you have LTV. Margin matters here because a customer's revenue isn't yours to spend; only the margin on it is.

The churn denominator does most of the work. At 3% monthly churn a customer stays about 33 months on average; at 5% it drops to 20. That is why retention improvements move LTV so much further than pricing changes of the same size. Use the toggle to enter annual figures if you report revenue per customer and churn yearly. The tool converts your inputs when you switch, so the answer stays consistent.

LTV to CAC is the ratio investors and CFOs ask about first, and it's best judged roughly. Below 1 you lose money on every customer. Around 3 is the figure most often cited as healthy for subscription businesses. Well above 5 often means underinvestment: the company could probably afford to acquire faster. These are common rules of thumb, not laws. Payback period, margin, and cash on hand all change what the right number is for you.

Formulas

LTV
= Revenue per customer per period × Gross margin ÷ Churn rate per period
Expected lifetime (periods)
= 1 ÷ Churn rate
Lifetime revenue
= Revenue per customer per period ÷ Churn rate
LTV : CAC
= LTV ÷ CAC
Time to recover CAC (months)
= CAC ÷ (Monthly revenue per customer × Gross margin)
Annual churn
= 1 − (1 − Monthly churn)^12

Frequently asked questions

How do you calculate customer lifetime value?

Multiply average revenue per customer per period by gross margin to get gross profit per period, then divide by the churn rate for that period. A customer paying $250 a month at 75% margin contributes $187.50 a month. At 3% monthly churn the expected lifetime is about 33 months, so LTV is roughly $6,250. The same formula works with annual figures as long as revenue and churn use the same period.

Should LTV use revenue or gross margin?

Gross margin. Revenue-based LTV overstates what a customer is worth because it ignores the cost of delivering the product or service. Finance teams and investors almost always want the margin-adjusted number, and comparing a revenue LTV against a fully loaded CAC produces a ratio that looks healthier than the business actually is. The tool shows lifetime revenue separately so you can see the gap.

What is a good LTV to CAC ratio?

The rules of thumb are rough, and worth treating as rough. Below 1 means each customer costs more to acquire than they return. Around 3 is the ratio most often cited as healthy for subscription businesses. Well above 5 often suggests the company could afford to acquire faster and is leaving growth on the table. Payback period, gross margin, and available cash all change the right target, so use the ratio as a prompt for questions rather than a verdict.

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