Customer Lifetime Value (LTV) measures the total revenue a business can expect from a single customer over the entire relationship. Understanding LTV helps you set acquisition budgets, forecast revenue, and identify the highest-value customer segments. Enter your metrics below to calculate LTV using both simple and discounted cash flow methods.
Business Inputs
Lifetime Value
Unit Economics
What-If Scenarios
| Scenario | Churn | Simple LTV | Change |
|---|
Benchmark Comparison
| Metric | Your Value | Healthy | Status |
|---|
How to Use the Customer Lifetime Value Calculator
Customer lifetime value is one of the most important metrics for any subscription or recurring-revenue business. It tells you how much total gross profit a single customer generates over the full span of their relationship with your company. When paired with customer acquisition cost (CAC), LTV reveals whether your growth engine is sustainable or burning cash.
Step 1: Enter Your ARPU and Gross Margin
Start with your average revenue per user per month (ARPU). This is your total monthly recurring revenue divided by total active customers. Next, enter your gross margin percentage — revenue minus cost of goods sold (hosting, infrastructure, support) divided by revenue. Most SaaS companies operate at 70-85% gross margins. The calculator uses these to determine monthly contribution margin per customer.
Step 2: Enter Your Monthly Churn Rate
Monthly churn rate is the percentage of customers who cancel each month. For example, if 15 out of 500 customers cancel, your churn rate is 3%. This single number has an outsized impact on customer lifetime value — cutting churn in half roughly doubles LTV. Use a 3-month trailing average for more stable results if your churn fluctuates.
Step 3: Add CAC and Discount Rate (Optional)
Customer acquisition cost is optional but unlocks the LTV:CAC ratio and payback period — two critical health indicators. CAC is total sales and marketing spend divided by new customers acquired in the same period. The discount rate (default 10%) is used for DCF LTV, which accounts for the time value of money and gives a more conservative lifetime value estimate.
Step 4: Review Your Results and What-If Scenarios
The calculator shows Simple LTV (traditional formula), DCF LTV (time-adjusted), average customer lifespan, and monthly contribution margin. If you entered CAC, you also get the LTV:CAC ratio (target 3:1+) and CAC payback period (target under 12 months). The what-if table shows how reducing churn by various amounts would change your LTV — a powerful way to quantify the value of retention improvements.
Understanding the Two LTV Methods
Simple LTV uses the formula ARPU x Margin / Churn and treats all future revenue equally. DCF LTV applies a discount rate using ARPU x Margin x (1 / (1 + discount - retention)), recognizing that future cash flows are worth less today. For short customer lifespans (under 12 months), both methods give similar results. For long lifespans, DCF LTV is meaningfully lower and more realistic.
Privacy
All calculations run entirely in your browser. Your revenue, churn, and acquisition cost data are never transmitted to any server. This tool works offline once loaded and never stores any information.
FAQ
Is this customer lifetime value calculator free?
Yes, this LTV calculator is completely free with no account or signup required. All calculations run locally in your browser — your business data is never sent to any server. Use it as many times as you need for different scenarios.
Is my data safe and private?
Absolutely. Everything runs entirely in your browser using JavaScript. No data is transmitted to any server, stored in any database, or shared with any third party. Your revenue and churn numbers stay on your device.
What is the difference between simple LTV and DCF LTV?
Simple LTV divides monthly contribution margin by churn rate, treating all future revenue equally. DCF (Discounted Cash Flow) LTV applies a discount rate to account for the time value of money — a dollar earned next year is worth less than a dollar today. DCF LTV is more conservative and realistic for long customer lifespans.
What is a good LTV:CAC ratio?
A ratio of 3:1 or higher is generally considered healthy — meaning each customer generates at least three times what it cost to acquire them. Below 1:1 means you lose money on every customer. Above 5:1 may indicate you are under-investing in growth and could scale acquisition spending.
How does churn rate affect customer lifetime value?
Churn rate has an outsized impact on LTV. Reducing monthly churn from 5% to 3% nearly doubles LTV because the average customer lifespan jumps from 20 months to 33 months. Even small churn improvements compound dramatically over time, making retention one of the highest-leverage growth levers.
What discount rate should I use for DCF LTV?
A 10% annual discount rate is the most common default for SaaS businesses. Early-stage startups with higher risk may use 15–20%. Established companies with predictable revenue can use 8–10%. The discount rate reflects the opportunity cost of capital and the risk that future revenue may not materialize.
How do I calculate monthly churn rate?
Divide the number of customers who cancelled during a month by the total number of customers at the start of that month, then multiply by 100. For example, if you started with 500 customers and lost 10, your monthly churn rate is (10/500) x 100 = 2%. Use a 3-month average for more stable results.