Customer Lifetime Value (LTV)

LTV = ARPU × gross margin × lifetime. Foundational SaaS unit economics.

Inputs

Optional — adjusts LTV for present value.

Result

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How to use this calculator

  • Enter ARPU + gross margin + churn.

About this calculator

LTV = total profit a customer generates over their lifetime. Formula: ARPU × gross margin × average lifetime (1/churn). $50 ARPU × 75% margin × 33 mo lifetime = $1238 LTV. Healthy LTV/CAC > 3:1. Low churn (1-2%) yields massive LTV; high churn (5-10%) torpedoes it. SaaS targets: <2% monthly churn enterprise, <5% SMB. Discounted LTV uses formula ARPU × GM / (churn + discount rate).

Frequently asked

Why discount LTV?+
Money received in 5 years is worth less today. Discounted LTV accounts for time value of money.
B2B vs. B2C LTV?+
B2B SaaS: $5k-100k+ (longer lifetime, larger contracts). B2C SaaS: $50-500. E-commerce: $200-2000.
Churn calculation?+
Monthly: customers lost / start-of-month customers. Annual: 1 − (1 − monthly_churn)^12.
Why include gross margin?+
Revenue ≠ profit. CoGS (hosting, support) eats some. LTV should reflect true profit contribution.
Negative-churn (expansion)?+
When existing customer revenue grows faster than churn loss. LTV becomes infinite mathematically. Replace formula with NRR-based approach.

Related calculators

CAC Payback Period
Months = CAC / (ARPU × gross margin). Time to recover acquisition cost.
Churn Rate Calculator
Monthly churn = customers lost / start customers. Annualized: 1 − (1−monthly)^12.
Gross Margin
Gross margin % = (Revenue − COGS) / Revenue. Profit before operating expenses.
Contribution Margin
CM = Revenue − Variable Costs. CM ratio = CM / Revenue.
MRR / ARR Growth Projection
MRR with monthly growth + churn → 12-month projection. ARR = MRR × 12.
CAC vs LTV Ratio
LTV / CAC ratio. Healthy SaaS: 3:1+; under 1:1 burns money.

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