Customer Lifetime Value Calculator
Estimate the gross profit value of a customer from monthly revenue, margin and churn, then compare it with acquisition cost.
Customer economics
Use customer averages from the same cohort and period. Your entries stay in this browser.
Lifetime value results
How customer lifetime value is estimated
Monthly gross profit equals monthly revenue × gross margin. Estimated lifetime is 1 ÷ monthly churn rate. LTV multiplies those two values.
Worked example
If a customer pays $100 per month, gross margin is 80% and monthly churn is 5%, monthly gross profit is $80 and estimated lifetime is 20 months. The resulting simple LTV is $1,600. With a $200 acquisition cost, the LTV:CAC ratio is 8:1 and gross-profit payback takes 2.5 months.
How to interpret the result
Compare cohorts acquired through the same channel and during the same period. A higher ratio is not automatically better: it can also mean the business is underinvesting in growth. A low ratio can point to expensive acquisition, weak margins or poor retention. Check all three inputs before changing a campaign.
When this model is not enough
This steady-state model assumes churn and customer economics remain constant. It does not discount future cash flows, separate expansion revenue from contraction, or model retention changes over time. For annual contracts, usage-based pricing or rapidly changing cohorts, calculate revenue and retention by cohort before making a budget decision.
Ways to improve LTV without hiding risk
Test onboarding and customer-success changes against retention, review pricing against delivered value, and reduce avoidable service costs without weakening the product. Recalculate after a full observation period instead of treating a short-term churn improvement as permanent.
LTV is a planning estimate, not a guarantee or financial advice.