How to use the Customer Lifetime Value Calculator
Enter Average revenue per customer (ARPU), per period, Gross margin (%), and either churn or retention for that same period. You can also enter Customer acquisition cost (CAC) - optional to calculate the LTV:CAC ratio. The result includes estimated LTV, lifespan in periods, gross margin per customer per period, assumptions, and intermediate values.
Customer Lifetime Value Formula
LTV is calculated directly from the values you enter, using the standard steady-state (non-discounted) formula, with no live data involved:
Gross margin per customer per period = ARPU × Gross margin
Average customer lifespan (periods) = 1 ÷ Churn rate
LTV = Gross margin per customer per period × Average customer lifespan
LTV:CAC ratio = LTV ÷ CAC (shown only when CAC is entered and greater than zero)
If you enter a retention rate instead of churn rate, the tool converts it as Churn rate = 100% − Retention rate for the same period before applying the formula.
Steps to calculate LTV
- Select Monthly, Quarterly, Annual, or Custom period from Period. This label does not convert units.
- Select a value from Currency symbol. It is display-only.
- Enter Average revenue per customer (ARPU), per period and Gross margin (%).
- Use the I know my... select to choose Churn rate or Retention rate, then enter the percentage for the same period.
- Optionally enter Customer acquisition cost (CAC) - optional.
- Click Calculate LTV.
- Use Copy result or Download result (.txt) to save the plain-text summary.
Reading the result and saving it
The result shows estimated customer lifetime value, average customer lifespan in periods, and gross margin per customer per period. The LTV:CAC ratio appears only when CAC is entered and nonzero; LTV still appears when CAC is zero. The assumptions table includes the entered assumptions and intermediate values, including churn and retention.
Copy result copies a plain-text summary. If clipboard access fails, it can display “Could not copy - select and copy manually.” Download result (.txt) saves the summary as a .txt file.
Assumptions, validation, and limitations
ARPU must be greater than 0. Gross margin must be between 0 and 100 inclusive. Churn must be greater than 0 and no more than 100; retention must be at least 0 and less than 100. CAC may be blank or at least 0. A CAC of exactly 0 produces a warning and no ratio. Churn below 1% produces a sensitivity warning.
- Use revenue and churn or retention figures for the same period. The period label does not convert monthly, quarterly, annual, or custom values.
- The model assumes constant churn and margin, applies no discounting, and excludes cohort differences, seasonality, and acquisition strategy.
- The currency symbol is a label only; no exchange-rate conversion is applied.
- CAC affects only the LTV:CAC ratio, not LTV itself.
This result is a mathematical estimate, not financial, accounting, or business advice.
Privacy and calculation scope
The calculator performs its calculations in your browser using the numeric values you enter. Its calculation script does not send those calculation values to a server. It does not fetch billing, CRM, or live customer records.
Frequently Asked Questions
How is customer lifetime value (LTV) calculated?
This tool uses the standard steady-state formula: LTV = (Average revenue per customer x Gross margin) / Churn rate. Average revenue per customer and gross margin give the gross margin earned per customer per period, and dividing by the churn rate scales that up by the average customer lifespan (1 / churn rate).
Should I enter churn rate or retention rate?
Either - use the I know my... select to choose whichever one you track. Retention rate is 100% minus churn rate for the same period, so the tool converts automatically and shows both in the result.
What does the LTV:CAC ratio mean?
LTV:CAC compares the estimated lifetime value of a customer to what it costs to acquire one. It is shown when you enter a customer acquisition cost (CAC) greater than zero. A CAC of zero produces a warning and no ratio, while LTV is still shown.
Does this tool fetch my actual revenue or customer records?
No. It only calculates from the revenue, margin, churn/retention, and optional CAC figures you type in. It does not connect to a billing system, CRM, or fetch live records. The calculator does not send the entered calculation values to a server.
Is this a substitute for financial or business advice?
No. This tool performs a transparent, steady-state arithmetic estimate from the figures you provide. It assumes a constant churn rate and margin over time and does not account for cohort differences, discounting, seasonality, or acquisition strategy - it is not financial, accounting, or business advice.