Calculate customer lifetime value

Estimate gross-profit lifetime value from monthly revenue, gross margin, and customer churn, then compare it with acquisition cost.

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ToolCustomer Lifetime Value Calculator
Input
Output
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How it works

The simplified expected lifespan is 100 divided by monthly churn percentage, making 5% churn equivalent to 20 months. Monthly revenue is reduced by gross margin before multiplication by lifespan, and that lifetime value is divided by CAC for the comparison ratio.

Formula
expected lifetime in months = 100 ÷ monthly churn percentage
lifetime value = monthly revenue × gross margin × expected lifetime
  • The 100% margin default reproduces a revenue-only model when service costs have not been supplied.
  • This reciprocal-churn model assumes a stable monthly exit probability rather than a measured cohort survival curve.

Worked example

100 average monthly revenue, 5% churn
Compared against a 200 cost to acquire the customer
Input
											Average monthly revenue per customer: 100
Monthly churn rate percent: 5
Customer acquisition cost: 200
Output
												Average customer lifespan months: 20
Lifetime value: 2000
Ltv to cac ratio: 10
Gross margin percent assumed: 100

When to use this

SaaS finance models, monthly cohort reviews, and marketing budget decisions compare subscription gross profit with the cost of acquiring each account.

Edge cases

  • A 0% churn rate implies an infinite lifetime in the reciprocal model, so processing stops as undefined.
  • A 100% monthly churn rate produces a one-month expected lifetime rather than zero months.
  • A 0% gross margin produces zero lifetime value and a zero LTV-to-CAC ratio, even when revenue is positive.