Customer Lifetime Value Calculator
Compute predictive LTV, the LTV:CAC ratio, and payback period in under a minute. Built on the same formulas top SaaS investors use during diligence.
Inputs
All monthly figures. Use your last 30 to 90 days of actuals, not annualized projections.
MRR divided by paying customers
75-85% typical for B2B SaaS
Customers lost / customers at start of month
Upsell and cross-sell, as % of base MRR
Customer acquisition cost - optional
Benchmarks
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Frequently asked questions
What is customer lifetime value (LTV)?+
Customer lifetime value is the total gross profit you expect to earn from a customer across the entire time they stay subscribed. It captures monetization (ARPU), retention (lifetime length), and unit economics (gross margin) in a single number. LTV is the foundation for figuring out how much you can spend to acquire each customer and still grow profitably.
What is the LTV formula?+
The standard SaaS LTV formula is: LTV = ARPU × Gross Margin × (1 / Monthly Churn). For example, $100 ARPU × 80% gross margin × (1 / 3% churn) = $2,667 LTV. The formula assumes a fixed monthly churn rate and a steady ARPU. If you have rapid expansion revenue, swap monthly churn for net revenue retention (NRR) to capture upsell.
What is a good LTV to CAC ratio?+
A healthy LTV:CAC ratio is 3:1 or higher. Below 1:1 you are destroying capital. Between 1:1 and 3:1 your unit economics are thin. Above 5:1 you may actually be underspending on growth and leaving market share on the table. Most efficient SaaS companies live between 3:1 and 5:1 and reinvest the surplus into paid acquisition.
Should I use gross profit or revenue for LTV?+
Always use gross profit. Revenue-based LTV is a vanity number because it ignores the cost of serving a customer (hosting, support, payment processing, licensing). Investors and serious operators always look at gross-margin LTV. For most SaaS this means multiplying ARPU by 75 to 85 percent gross margin before computing the lifetime.
How does churn affect LTV?+
Churn has more leverage on LTV than any other variable. Cutting monthly churn from 5 percent to 3 percent extends average customer lifetime from 20 months to 33 months, lifting LTV by 65 percent without changing pricing or margin. This is why retention investments almost always beat acquisition investments at scale.
How do I improve customer lifetime value?+
Five levers, ranked by impact: (1) Reduce churn through onboarding, customer success, and product fit. (2) Expand revenue with upsell, cross-sell, and usage-based pricing. (3) Raise prices on new customers, especially at the higher tiers. (4) Improve gross margin by renegotiating infra or simplifying support. (5) Move from monthly to annual plans to lock in retention and reduce involuntary churn.
What is the difference between predictive LTV and historical LTV?+
Historical LTV is the actual revenue generated by customers who have already churned or stayed a long time. Predictive LTV is the forward-looking estimate based on current churn and ARPU assumptions. The calculator above computes predictive LTV. Use historical LTV for cohort analysis once you have 12 plus months of data. Use predictive LTV for daily decisions on paid acquisition spend.