Subscriptions

LTV Calculator

Estimate customer lifetime value from ARPU, gross margin, churn and acquisition cost.

Subscriptions

LTV Calculator

Use this to compare lifetime gross profit with acquisition cost for SaaS, memberships, subscriptions and repeat-purchase products.

Monthly ARPU$49Average monthly revenue per customer.Gross margin82%Revenue left after direct service or product costs.Monthly churn4%Share of customers expected to cancel each month.CAC$120Customer acquisition cost to compare with LTV.

How to use this calculator

Start with conservative inputs, copy the result, then test a best-case and worst-case version. For production decisions, compare the estimate against actual accounting, analytics and payment data.

Formula

This simple LTV model estimates lifetime gross profit by dividing monthly gross profit by churn. It works best for recurring revenue where churn is measured consistently.

Formula

LTV = monthly ARPU * gross margin / monthly churn rate. LTV:CAC = LTV / CAC.

Example

SaaS LTV sanity check

A SaaS product earns $49 ARPU, keeps 82% gross margin and estimates 4% monthly churn.

Monthly ARPU: $49
Gross margin: 82%
Monthly churn: 4%
CAC: $120

The example estimates about $1,005 in LTV and an 8.4x LTV:CAC ratio.

FAQ

Why use gross margin in LTV?

Gross margin keeps the estimate focused on gross profit, not top-line revenue. That makes comparison with CAC more useful.

What if churn is zero?

Zero churn is unlikely over a long period. The calculator caps the simple lifetime assumption at 60 months for planning.

Is LTV useful for one-time purchases?

It can be, but repeat purchase rate and purchase frequency matter more. This MVP uses a recurring revenue style model.

Important limits

Small churn changes can create very large LTV swings.
Use cohorts and real retention data before making major acquisition decisions.