Customer Lifetime Value (LTV)
LTV = ARPU × gross margin × lifetime. Foundational SaaS unit economics.
Result
LTV
$1,250
33.3 mo avg lifetime · discounted LTV: $978.
- ARPU (monthly)$50.00
- Gross margin75.0%
- Monthly churn3.00%
- Avg lifetime33.3 months
- Simple LTV$1,250
- Discounted LTV$978
Step-by-step
- Lifetime = 1 / churn = 33.33 months.
- LTV = ARPU × gross margin × lifetime = 50 × 0.75 × 33.33 = $1,250.
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
Money received in 5 years is worth less today. Discounted LTV accounts for time value of money.
Related calculators
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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.