Customer Lifetime Value (LTV) & LTV:CAC Calculator

Calculate customer lifetime value from churn, expected lifetime or repeat purchases, then compare it with CAC and see your payback period.

Business model

Average monthly revenue per customer ($)

Monthly customer churn (%)

Gross margin (%)

Customer acquisition cost, optional ($)

Calculated entirely in your browser — nothing you enter here is sent to a server.

How lifetime value is calculated

Customer lifetime value (LTV, also called CLV) estimates the gross profit one customer brings in before they leave. This calculator reports it on a gross-margin basis, because comparing lifetime revenue with acquisition cost ignores what it costs to serve the customer and overstates the return.

Expected lifetime (months) = 1 ÷ monthly churn rate
LTV = monthly revenue × gross margin × lifetime
Repeat purchase LTV = order value × purchases per year × years × gross margin
LTV:CAC = LTV ÷ CAC and payback (months) = CAC ÷ monthly gross profit

Worked example

A subscription earns $50 a month per customer at an 80% gross margin, and 2% of customers cancel each month. The expected lifetime is 1 ÷ 0.02 = 50 months, so lifetime revenue is $2,500 and LTV is $2,500 × 0.8 = $2,000. If acquiring a customer costs $500, LTV:CAC is 4 : 1, and the $40 of monthly gross profit repays that $500 in 12.5 months.

Reading the result

A 3 : 1 LTV:CAC ratio is a widely quoted rule of thumb for subscription businesses, not a standard; what is healthy depends on your cash position, growth goals and how reliable your churn figure is.
Churn-based lifetime assumes churn stays constant. With very low churn the lifetime gets long and uncertain — if you have real cohort data, use the expected-lifetime option instead. A churn of 0% is rejected because the formula has no upper limit.
The payback period matters for cash flow even when the ratio looks strong: a long payback ties up money.
Not sure what your acquisition cost is? Work it out with the CAC calculator, and your gross margin with the profit margin calculator.

Frequently asked questions

Where do I get my monthly churn rate?: Divide the customers who cancelled during a month by the customers you had at the start of it. The churn rate calculator works it out, along with revenue retention.
Should LTV use revenue or gross profit?: Gross profit, as this calculator does. Comparing lifetime revenue with acquisition cost ignores what it costs to serve the customer and overstates the return.
How much does reducing churn change LTV?: With churn-based lifetime, LTV is inversely proportional to churn. Halving monthly churn from 2% to 1% doubles the expected lifetime from 50 to 100 months, and doubles LTV from $2,000 to $4,000 in the page's example.
Is a 3:1 LTV:CAC ratio required?: No. It is a widely quoted rule of thumb, not a standard. A business with plenty of cash may accept a lower ratio to grow faster; one with a long payback period may need a higher one.