LTV Calculator
Estimate customer Lifetime Value (LTV) using ARPA, gross margin, and churn rate.
This is a quick LTV (Lifetime Value) model based on monthly ARPA, gross margin, and churn. It estimates how much gross profit you earn per customer over their expected lifetime.
For accuracy, keep time units consistent (monthly ARPA with monthly churn). For mature businesses, cohort-based LTV is more reliable than a single churn rate.
Prefer an explanation- Read the guide.
LTV: How to estimate Lifetime Value (and when not to)LTV:CAC ratio: how to interpret the ratio (and avoid mistakes)LTV sensitivity: how churn and margin change LTVARPA: how to calculate Average Revenue Per Account (formula + examples)
Average revenue per account (monthly).
$
%
%
Used to compute discounted LTV. Set 0 to disable.
%
Used to compute LTV:CAC.
$
Used to estimate max CAC at your LTV.
Tip: you can type commas (e.g., 10,000).
Example
Using the default inputs, the result is:
$5,333.33
- ARPA per month
- $200
- Gross margin
- 80%
- Monthly churn
- 3%
- Annual discount rate (optional)
- 0%
- CAC (optional)
- $0
- Target LTV:CAC (optional)
- 3
How to calculate
- Choose a segment (plan/channel/geo) and a time unit (monthly).
- Enter ARPA per month and gross margin for the segment.
- Enter monthly churn rate (customer churn for this model).
- Compute LTV = (ARPA * gross margin) / churn.
Formula
LTV = (ARPA * Gross Margin) / Churn Rate
- Churn is steady over time (a simplifying assumption).
- ARPA and churn use the same time unit (monthly).
FAQ
Should I use revenue churn or customer churn-
This calculator uses customer churn for simplicity. For many SaaS businesses, revenue churn (NRR/GRR) is more representative.
Common mistakes
- Mixing annual ARPA with monthly churn (unit mismatch).
- Using revenue churn/NRR numbers as if they were customer churn.
- Ignoring payback period and cash constraints when using LTV for budgeting.
How to interpret
How to use this LTV model
- Use a consistent time unit: monthly ARPA with monthly churn.
- Gross margin should reflect direct costs (COGS), not operating expenses.
- Treat this as a quick estimate; cohort-based LTV is more accurate.
Common pitfalls
- Using revenue churn (NRR/GRR) but labeling it as customer churn.
- Using annual churn with monthly ARPA (mismatched units).
- Ignoring expansion/upsell when churn is low.
Related calculators
SaaS Metrics
CAC Calculator
Calculate Customer Acquisition Cost (CAC) from total acquisition spend and new customers.
SaaS Metrics
Fully-loaded CAC Calculator
Calculate fully-loaded CAC by including paid spend plus sales & marketing costs (salaries, tools, and other acquisition costs).
SaaS Metrics
LTV Sensitivity Calculator
See how gross profit LTV changes as churn and gross margin vary (simple 3x3 sensitivity).
SaaS Metrics
LTV:CAC Calculator
Compute LTV:CAC ratio and CAC payback using ARPA, gross margin, churn, and CAC.
SaaS Metrics
CAC Payback Period Calculator
Estimate how many months it takes to recover CAC (months to recover CAC) using gross profit.
SaaS Metrics
CAC Payback Sensitivity Calculator
See how CAC payback months change as ARPA and gross margin vary (simple 3x3 sensitivity).
Quick checks
- Keep time units consistent (monthly vs annual) across inputs and outputs.
- Segment by cohort/channel/plan before trusting a blended average.
- Use the related guide to avoid common definition and denominator mismatches.