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LTV Calculator

Calculate customer lifetime value from ARPU, margin and lifespan.

Growing your businessStep 4 of 7

Best for: Use it to set acquisition budgets and judge whether growth is profitable.

Complete guide
See benchmark ranges Why this result happened View assumptions
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Result

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Customer lifetime value (LTV): ₹19,200
Standard formula Private — runs in your browser, no account

What to do next

Part of the 🚀 Grow a Business pathNext: SaaS Metrics Calculator
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More about this result
Result quality
Type
Industry Standard
Method
Industry-standard method
Confidence
High

Uses the standard formula and conventions the industry relies on.

What this means

LTV is profit per customer over their lifetime. Only meaningful next to CAC \u2014 aim for LTV at least 3\u00d7 your acquisition cost.

What impacts this result most?
  1. 1.
    ChurnHigh impact

    Lower churn lengthens the customer lifetime.

  2. 2.
    ARPUHigh impact

    More revenue per user raises LTV.

  3. 3.
    Gross marginHigh impact

    LTV should be on gross profit, not revenue.

  4. 4.
    CACMedium impact

    Sets the LTV:CAC ratio.

How to improve this result
  • Reduce churn
  • Raise ARPU with upsells
  • Improve gross margin
3 Important insights
  • Margin (on price) and markup (on cost) are not the same.
  • Your break-even depends on fixed vs variable costs.
  • A small price increase moves profit more than a small cost cut.

A healthy business earns back several times its CAC per customer - aim for LTV:CAC of 3:1 or better. — U.S. SEC (investor.gov)

People usually ask next
Is this above average? Compare CAC Calculator

Worth a revisit later — your costs and margins change.

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How it's calculated & sources
The LTV Calculator uses the standard formula for this calculation. It runs entirely in your browser, so your inputs are never uploaded. Figures are educational estimates, not professional advice — verify important decisions with a qualified expert. Last reviewed June 2026.
Key assumptions
  • Constant churn and margin
  • Gross-profit basis

Free & no sign-up · runs entirely in your browser. Results are estimates for general information, not professional advice — verify important decisions with a qualified expert. Last reviewed June 2026.

How it works

LTV = monthly revenue per user × gross margin × average customer lifespan (in months).

Frequently asked questions

What's a healthy LTV:CAC?+

3:1 is a common benchmark — you earn three times what it costs to acquire a customer.

Continue your journey

Where people usually head next.

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Estimate a startup's valuation using a revenue multiple.
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Calculate gross and net burn and your runway in months.
🛫
Runway Calculator
See how many months of runway your cash gives you.
🎯
CAC Calculator
Calculate your customer acquisition cost.

Complete guide

Quick answers

Short, sourced answers to the questions people (and AI assistants) ask most.

What is LTV?
Customer Lifetime Value (LTV or CLV) is the total profit you expect from a customer over the whole relationship. It tells you how much you can afford to spend to acquire one.
Why does LTV matter?
It sets how much you can afford to spend to acquire and keep a customer.
How is LTV calculated?
It multiplies the profit per period by how long customers stay (the inverse of churn), so lower churn and higher margins both raise LTV. Formula: LTV = (ARPA \u00d7 gross margin) \u00f7 churn rate.
What is a good ltv?
Aim for LTV:CAC of at least 3:1
What are common ltv mistakes?
Using revenue instead of gross profit \u2014 LTV should be margin-based.
When should you use the LTV Calculator?
Use it to set acquisition budgets and judge whether growth is profitable.

What is the LTV Calculator?

Customer Lifetime Value (LTV or CLV) is the total profit you expect from a customer over the whole relationship. It tells you how much you can afford to spend to acquire one.

How the LTV Calculator works

It multiplies the profit per period by how long customers stay (the inverse of churn), so lower churn and higher margins both raise LTV.

LTV = (ARPA \u00d7 gross margin) \u00f7 churn rate
  • ARPA — Average revenue per account per period
  • gross margin — Profit share of that revenue
  • churn rate — % of customers lost per period
  1. Enter your lifetime value (ltv) — the total profit you expect from a customer over the whole relationship.
  2. Enter your churn rate — the percentage of customers or revenue lost in a period.
  3. Enter your customer acquisition cost (cac) — the average amount spent on sales and marketing to win one new customer.
  4. Read the result, then change any input to compare scenarios instantly — the LTV Calculator recalculates as you type.

Understanding the inputs

What each value means, why it matters, and a typical range — so you can fill in the calculator with confidence.

Lifetime Value (LTV)

The total profit you expect from a customer over the whole relationship.

Why it matters:
It sets how much you can afford to spend to acquire and keep a customer.
Typical range:
Aim for LTV at least 3x your CAC.
How it affects results:
  • Higher: More room to invest in growth.
  • Lower: Less room to spend on acquisition.

Common mistake: Using revenue instead of gross profit, which overstates LTV.

Churn Rate

The percentage of customers or revenue lost in a period.

Why it matters:
High churn quietly caps growth and slashes lifetime value.
Typical range:
5% to 7% per year is often cited as acceptable for SaaS; lower is better.
How it affects results:
  • Higher: Customers leave faster, shrinking lifetime value.
  • Lower: Customers stay longer, raising lifetime value.

Common mistake: Mixing customer churn and revenue churn, which can differ a lot.

Customer Acquisition Cost (CAC)

The average amount spent on sales and marketing to win one new customer.

Why it matters:
It only makes sense next to lifetime value; together they show if growth is profitable.
Typical range:
A healthy LTV:CAC ratio is around 3 to 1.
How it affects results:
  • Higher: More expensive growth that can erode profit.
  • Lower: More efficient growth.

Common mistake: Counting only ad spend and ignoring salaries, tools and content.

Benchmark reference

What counts as poor, average or excellent for this metric.

Customer Acquisition Cost

AverageEvaluate vs LTV

Source: Standard unit-economics guidance · Updated June 2026

LTV:CAC Ratio

Average~3:1

Source: Standard SaaS unit-economics guidance · Updated June 2026

Typical values

Customer Acquisition Cost:
Aim for LTV:CAC of at least 3:1
LTV:CAC Ratio:
Aim for about 3:1 or higher

Common interpretation errors

  • Judging CAC without LTV beside it
  • Counting only ad spend, not salaries and tools
  • Above ~5:1 can mean under-investing in growth
  • Use gross-profit LTV

What impacts results most

  1. 1.
    Churn (High impact)Lower churn lengthens the customer lifetime.
  2. 2.
    ARPU (High impact)More revenue per user raises LTV.
  3. 3.
    Gross margin (High impact)LTV should be on gross profit, not revenue.
  4. 4.
    CAC (Medium impact)Sets the LTV:CAC ratio.

Key assumptions

  • Constant churn and margin
  • Gross-profit basis

What's a typical value?

A healthy SaaS runs LTV:CAC around 3:1. Below 1:1 you lose money on each customer; above ~5:1 you may be under-investing in growth.

LTV : CAC ratio and the common 3:1 rule of thumb

$3,000$3,0001 : 1Below the 3:1 rule of thumb
$6,000$3,0002 : 1Below the 3:1 rule of thumb
$9,000$3,0003 : 1Healthy (3:1 – 5:1)
$12,000$3,0004 : 1Healthy (3:1 – 5:1)
$15,000$3,0005 : 1Strong — consider spending more to grow

Worked example

Inputs: ARPU $1,000/month, 70% gross margin, 5% monthly churn Calculation: LTV = ARPU × margin ÷ churn Result: $14,000 (with $2,000 CAC → 7:1) What it means: A ratio above ~5:1 can mean under-investing in growth; use gross-profit LTV.

Key terms

ARPA:
Average Revenue Per Account in a period.
Churn:
The % of customers who leave each period.

Common mistakes to avoid

  • Using revenue instead of gross profit \u2014 LTV should be margin-based.
  • Assuming churn is constant; early customers often churn faster.
  • Ignoring expansion revenue, which raises true LTV.

Compared to alternatives

CAC vs LTV

CAC is what a customer costs to win; LTV is the profit they bring over time.

CACLTV
MeasuresAcquisition costLifetime gross profit
HealthyRecovered in <12 monthsAt least 3x CAC
LeverChannel efficiencyRetention / ARPU

Bottom line: Neither means much alone - track the LTV:CAC ratio (aim 3:1+).

CAC calculator·LTV calculator

Related concepts

How LTV connects to the concepts around it.

CAC:
The average cost to win one new customer.
LTV:CAC:
Lifetime value divided by acquisition cost.
Churn:
The percentage of customers or revenue lost in a period.
ROI:
Percentage gain or loss on an investment versus its cost.

Marketing ROI learning path

A sensible order to learn these concepts.

CPCCTRConversion RateROASCACLTV

Reviewed sources & methodology

Methodology: Industry Standard · Last reviewed June 2026.

Keywords: ltv, lifetime value, saas, customer.

This is an educational estimate, not financial advice. Rates, rules and figures change — verify the latest with the provider or a qualified advisor before you decide.

Reviewed by the Free Tools Galaxy editorial team · Updated June 2026 · Calculated privately in your browser.

Frequently asked questions

Is the LTV Calculator free to use?+

Yes. Every tool on Free Tools Galaxy is 100% free, runs in your browser and requires no signup.

How accurate is the LTV Calculator?+

LTV Calculator uses the standard ltv formula in double-precision arithmetic, so the same inputs always produce the same result and you can verify any figure by hand. It is an educational estimate — real-world outcomes depend on your actual rates, rules and assumptions.

Do you store my inputs?+

No. The LTV Calculator runs entirely in your browser. Nothing is uploaded or saved to a server.

Can I use the LTV Calculator on mobile?+

Yes — the interface is fully responsive and works on phones, tablets and desktops.

What are common mistakes to avoid?+

The most frequent mistake is mixing units. Double-check your inputs use a single, consistent unit before clicking Calculate.

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Calculate customer lifetime value from ARPU, margin and lifespan.

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