Customer LTV Calculator
Calculate customer lifetime value, and how it stacks up against your acquisition cost.
How this is calculated
LTV takes your ARPU, applies gross margin (the share of revenue left after cost of goods sold), and divides by monthly churn rate — the standard shorthand estimate of total value per customer. If you provide a CAC, the LTV:CAC ratio and payback period compare that value against what it costs you to acquire each customer.
The payback period specifically — how many months until a customer's margin-adjusted revenue covers their acquisition cost — matters as much to fundraising as the LTV:CAC ratio itself. Using this calculator's defaults ($50 ARPU, 80% gross margin, 5% monthly churn, $300 CAC), monthly margin-adjusted revenue is $50 × 80% = $40, so payback takes $300 / $40 = 7.5 months. Investors typically want to see payback well under 12 months, since a business with a longer payback period needs more capital up-front to fund growth before each new customer becomes profitable — this is a key input to how much runway a growth-stage raise needs to cover. See the SaaS Revenue Estimator for the revenue side of this picture, and the Startup Runway calculator for how acquisition spend translates into cash burn.
Frequently asked questions
- How is LTV calculated?
- LTV = (ARPU × gross margin) / monthly churn rate — the margin-adjusted monthly revenue a typical customer generates, divided by how quickly customers churn away. This is the standard shorthand formula used across SaaS and subscription businesses.
- What is a good LTV:CAC ratio?
- Below 1 means you're losing money on every customer. 1-3 is marginal — sustainable but with thin margins for growth spend. 3-5 is considered healthy. Above 5 is excellent, though it can also suggest you're under-investing in growth relative to how profitable each customer is.
- What is payback period?
- How many months it takes for a customer's margin-adjusted revenue to cover their acquisition cost. Shorter payback periods mean less cash tied up before a customer becomes profitable — important for cash-constrained businesses.
- Can I use this in my own app?
- Yes — every calculator on Stupidly Clever has a matching REST API and MCP tool that runs the same underlying logic.
- How does churn rate affect LTV?
- Churn rate is the denominator in the LTV formula, so LTV is highly sensitive to it — halving your monthly churn rate roughly doubles LTV. Even small improvements in retention can meaningfully increase how much revenue each customer generates over their lifetime.
- What is the difference between LTV and CLV?
- LTV (Lifetime Value) and CLV (Customer Lifetime Value) are generally used interchangeably in SaaS and subscription businesses — both refer to the total value a customer generates over their relationship with the company. Some finance contexts use CLV specifically for the discounted, present-value version, but in most SaaS usage the terms mean the same thing.
- How do you increase LTV?
- The three levers are increasing ARPU (raising prices or upselling), improving gross margin (reducing cost of serving each customer), and reducing churn (retention efforts, better onboarding, improved product fit) — since LTV = (ARPU × gross margin) / churn rate, improving any one of these three inputs raises LTV.