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LTV (Customer Lifetime Value) Calculator

Calculate LTV using ARPA, gross margin, churn rate, and discount rate.

LTV (Customer Lifetime Value) Calculator

Estimate LTV from ARPA, margin, churn, and discount rate.

Enter revenue and churn

Formula

Margin per month = ARPA × gross margin %.

Effective rate = churn rate + monthly discount rate.

LTV = margin per month ÷ effective rate.

Steps

  • Enter monthly ARPA/ARPU (average revenue per account).
  • Enter gross margin percentage.
  • Enter monthly churn percentage.
  • Optionally add annual discount rate to be conservative.
  • Review LTV, margin, and effective rate assumptions.

Additional calculations

Enter ARPA, margin, and churn to see LTV.

Related calculators

SaaS CAC (Customer Acquisition Cost) Calculator

Pair LTV with CAC for efficiency.

Payback Period (Customer Acquisition) Calculator

See months to recover CAC.

Customer Lifetime Value (LTV): How to Calculate It

Use this guide to compute LTV, choose conservative assumptions, and keep acquisition efficient with LTV:CAC and payback.

Table of Contents

Definition & Formula

LTV = (ARPA × gross margin) ÷ (churn rate + discount rate). Use monthly rates and conservative discounting.

Key Assumptions

Accurate churn and margin inputs matter most. Even a 0.5% change in churn can swing LTV meaningfully.

Benchmarks & Caps

Cap lifetime to avoid overstatement. Many teams cap at 60–84 months. Revisit assumptions quarterly.

Improving LTV

  • Reduce churn via onboarding, adoption, and success playbooks.
  • Increase ARPA via packaging and value-based pricing.
  • Improve margin through cost optimization.

Tracking Cadence

Update LTV monthly; pair with CAC, LTV:CAC, and payback to keep capital efficiency visible and LCP low.

FAQs

What is LTV?

Customer Lifetime Value (LTV) estimates gross profit generated over a customer lifetime.

Which churn to use?

Use logo churn for account-level LTV; use revenue churn if LTV is revenue-weighted.

Why discount rate?

Discounting future cash flows is conservative and reduces LTV, especially for long lifetimes.

Should I cap lifetime?

Many teams cap lifetime at 5–7 years even with low churn to avoid overstating LTV.

How does LTV connect to CAC?

Use LTV:CAC to gauge acquisition efficiency. Ratios above 3:1 are typically strong.

Summary

Calculate LTV from ARPA, gross margin, churn, and discounting with the Vitamin K template.

Outputs include LTV, margin, effective rate, recommendations, action plan, formula, steps, guide, related tools, FAQs, and summary.

Use alongside CAC, payback, and LTV:CAC to ensure efficient growth.

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LTV (Customer Lifetime Value) Calculator

Calculate LTV using ARPA, gross margin, churn rate, and discount rate.

How to use LTV (Customer Lifetime Value) Calculator

Step-by-step guide to using the LTV (Customer Lifetime Value) Calculator:

  1. Enter your values. Input the required values in the calculator form
  2. Calculate. The calculator will automatically compute and display your results
  3. Review results. Review the calculated results and any additional information provided

Frequently asked questions

How do I use the LTV (Customer Lifetime Value) Calculator?

Simply enter your values in the input fields and the calculator will automatically compute the results. The LTV (Customer Lifetime Value) Calculator is designed to be user-friendly and provide instant calculations.

Is the LTV (Customer Lifetime Value) Calculator free to use?

Yes, the LTV (Customer Lifetime Value) Calculator is completely free to use. No registration or payment is required.

Can I use this calculator on mobile devices?

Yes, the LTV (Customer Lifetime Value) Calculator is fully responsive and works perfectly on mobile phones, tablets, and desktop computers.

Are the results from LTV (Customer Lifetime Value) Calculator accurate?

Yes, our calculators use standard formulas and are regularly tested for accuracy. However, results should be used for informational purposes and not as a substitute for professional advice.