Growth & SaaS metrics

Customer lifetime value (LTV) calculator

Lifetime value tells you how much gross profit an average customer contributes before they leave. Paired with acquisition cost, it determines whether growth creates or destroys value.

Inputs

Result

Customer lifetime value

USD 5,000

Expected lifespan
33.3 months
Gross profit per customer per month
USD 150
LTV capped at 36 months
USD 4,999.5
LTV:CAC ratio
5.56x
Months to recover CAC
6 months
  • A 3:1 LTV:CAC with sub-18-month payback is the benchmark most investors apply.

How to use this calculator

  1. 1Enter average monthly revenue per customer and your gross margin.
  2. 2Enter monthly customer churn.
  3. 3Add acquisition cost to see the LTV:CAC ratio and payback period.

Use margin, not revenue

LTV = average revenue per customer per month x gross margin / monthly churn rate. Using revenue instead of gross profit overstates LTV by the entire cost of delivery, which is how unprofitable acquisition budgets get approved.

Expected customer lifespan is simply 1 / churn. A 2% monthly churn rate implies a 50-month average life; 5% implies 20 months.

Reading the LTV:CAC ratio

Below 1:1 you lose money on every customer. Around 3:1 is the conventional healthy target. Above 5:1 you are often underinvesting in growth and leaving market share available to competitors.

Discount long lifespans. Cash arriving in year five is worth materially less than cash today, so many investors cap the LTV horizon at 36 months.

Call this tool from the API

Every calculator on this site is also an endpoint. Get a free key from the developer page and call it from your product, spreadsheet or AI agent.

curl -X POST https://utopiavalue.co/api/v1/tools/customer-lifetime-value-calculator \
  -H "Authorization: Bearer $UTOPIA_API_KEY" \
  -H "Content-Type: application/json" \
  -d '{"arpu":200,"grossMarginPercent":75,"monthlyChurnPercent":3,"cac":900,"currency":"USD"}'

Frequently asked questions

Which churn should I use, customer or revenue?

Use customer (logo) churn for LTV per customer. If you have meaningful expansion revenue, use net revenue churn, which can be negative and produces a much higher LTV.

My business is not subscription — does LTV apply?

Yes. Use average purchase value x purchases per year x expected years of custom, multiplied by gross margin.

What LTV:CAC do acquirers look for?

Three or better with payback under 12-18 months signals an acquisition engine a buyer can scale after completion.