Customer Lifetime Value (LTV) Calculator

How to use

Understand customer value, acquisition economics, and what retention improvements could mean.

Enter average revenue per customer per billing or purchase cycle, gross margin, customer lifetime and cycle. Select Customer Lifetime or Churn Rate. Optional acquisition cost appears below the main result. Calculate LTV is the default; Set LTV Goal keeps your current assumptions visible. Copy Result copies the current analysis and Reset restores $120, 70%, 18 months, Monthly, USD and blank CAC. Refresh clears the form.

Revenue LTV vs gross-profit LTV formulas

Revenue LTV = revenue per cycle × lifetime cycles. Gross-profit LTV = revenue per cycle × gross margin (decimal) × lifetime cycles. Revenue LTV describes total modeled customer revenue. Gross-profit LTV subtracts direct cost of goods or service through the entered margin. It is not net profit, free cash flow or contribution after all overhead. CAC does not change either LTV; it is compared separately.

Customer lifetime

Lifetime cycles = lifetime in years / cycle length in years. The convention is 1 year = 12 months = 52 weeks; a quarter is 3 months. Thus 18 months with Monthly is 18 cycles, 2 years with Monthly is 24 cycles, and 2 years with Quarterly is 8 cycles. Weekly, Monthly, Quarterly and Yearly are supported; fractional cycles are allowed. This convention does not use exact calendar days. For one-off purchases, use the average revenue per purchase cycle and expected number of repeat cycles.

Churn-based lifetime estimate

Simplified expected lifetime cycles ≈ 1 / customer churn rate as a decimal per selected cycle. Monthly churn of 5% gives 1 / 0.05 = 20 monthly cycles. Quarterly churn of 5% gives 20 quarters, not 20 months. Churn and revenue must share the selected cycle basis. At 100% churn the estimate is one cycle; zero churn has no finite lifetime under this model. 1/churn assumes a constant customer churn probability and a geometric-style retention model. Real customer cohorts may have changing churn over time, onboarding churn, cohort differences, seasonality, expansion/contraction and reactivation. It is not a universally exact lifetime formula; do not substitute net revenue churn.

Gross margin

Gross margin = (revenue − direct cost of goods or service) / revenue. Enter the percentage, so 70% means 0.70 in the formula. At $120 per cycle, gross profit per cycle is $84. Increasing margin increases gross-profit LTV linearly under unchanged revenue and lifetime. Zero margin gives zero gross-profit LTV; 100% margin is mathematically allowed and makes it equal revenue LTV. Use a margin definition consistent with your costs.

Customer acquisition cost

CAC is average customer acquisition cost: acquisition spend divided by newly acquired customers on a consistent basis. It is optional and blank by default. Entering CAC adds comparisons without changing customer value. Gross-profit surplus after CAC = gross-profit LTV − CAC. This excludes other costs and must not be called net profit.

You can compare acquisition cost with order-level break-even using a reconciled revenue and variable-cost basis. First-order contribution and lifetime gross-profit value are different measures; a positive LTV or surplus after CAC does not guarantee advertising profitability.

LTV:CAC

Gross-profit LTV:CAC = gross-profit LTV / CAC. With $1,512 LTV and $400 CAC, the ratio is 3.78×: modeled gross-profit LTV is 3.78 times entered CAC. Zero CAC makes the ratio undefined; surplus remains the gross-profit LTV. Zero gross margin gives a ratio of 0 when CAC is positive. The calculator reports the arithmetic without good/bad ratings or universal business benchmarks.

CAC payback

Gross profit per cycle = revenue per cycle × gross margin. Payback cycles = CAC / gross profit per cycle. For $400 CAC and $84 gross profit per month, payback is 4.7619 months, shown as approximately 4.8 months. This simplified model assumes revenue arrives evenly by cycle, stable gross margin, no onboarding lag, no early churn before payback and no expansion/contraction. It is not exact cash-flow timing. CAC cannot be recovered with zero gross profit per cycle under this model. With positive gross profit and zero CAC, modeled payback is zero cycles.

Retention sensitivity

Direct lifetime mode adds 1, 3 and 6 months using the same 12-month/52-week convention, then recalculates gross-profit LTV with unchanged revenue and margin. Default results are $1,596 (+$84), $1,764 (+$252) and $2,016 (+$504) per customer. Churn mode subtracts 0.5, 1 and 2 percentage points where the remaining churn is positive. A change from 5% to 4% is a 1 percentage-point reduction, not 1% less churn. Nonpositive resulting churn is shown as having no finite positive-churn lifetime. These are mathematical sensitivity scenarios, not promised retention gains.

You can model a separate recurring-revenue churn scenario while keeping customer churn and revenue churn distinct. Reconcile time periods and revenue definitions manually; a customer-level lifetime estimate is not the same as a monthly MRR recurrence.

LTV goal planning

Target gross-profit LTV / (revenue per cycle × gross margin) gives required lifetime cycles under unchanged revenue and margin assumptions. Target / (gross margin × current lifetime cycles) gives required revenue per cycle under unchanged margin and retention assumptions. At a $2,000 target, $120/month, 70% margin and 18 months, required lifetime is 23.8095 monthly cycles (approximately 23.8 months), or required revenue is $158.73/month. These are independent one-variable alternatives, not recommendations. Zero revenue prevents a finite required lifetime but a revenue requirement can still be calculated with positive margin. Zero margin prevents either positive-target solution.

To describe the difference between alternatives, compare customer-value scenarios consistently with matching horizons, churn definitions, margins and units. A relative percentage change does not establish a causal retention gain or make the target achievable.

Worked examples

Lifetime example

$120/month × 18 months = $2,160 revenue LTV. $120 × 0.70 × 18 = $1,512 gross-profit LTV.

Acquisition example

$1,512 / $400 = 3.78× gross-profit LTV:CAC. $1,512 − $400 = $1,112 gross-profit surplus after CAC. $400 / ($120 × 0.70) ≈ 4.76 months payback.

Churn example

5% monthly customer churn gives simplified expected lifetime 1 / 0.05 = 20 months. $120 × 0.70 × 20 = $1,680 gross-profit LTV under the constant-churn simplification.

Retention improvement example

18 months + 3 months = 21 months. $120 × 0.70 × 21 = $1,764 gross-profit LTV, an increase of $252/customer under unchanged assumptions.

Assumptions and limitations

All outputs are planning estimates under entered assumptions. Revenue, margin and churn remain constant. Fractional cycles, undiscounted value and an evenly spread gross profit are used. Taxes, overhead, cash collection timing, refunds beyond entered revenue, cohort survival, expansion/contraction, reactivation and uncertainty are not modeled. There is no guaranteed customer value or retention improvement. No single LTV formula fits every business. The SVG chart uses cumulative gross-profit value = gross profit per cycle × elapsed cycles, with seven milestones from zero to the modeled lifetime. It assumes the customer remains active throughout that horizon and is not a cohort survival curve. Optional CAC appears as a horizontal line and a recovery marker only when payback falls within that horizon. Beyond-horizon recovery is identified in text. Currency USD, EUR or GBP affects formatting only, with no FX conversion. Inputs stay in memory; there are no accounts, imports, stored business data, URL state or network calculations. Monetary inputs and target are capped at 1 trillion; lifetime at 1 million selected units. Finite numeric results are required.

FAQ

What is customer lifetime value?

LTV or CLV is a modeled customer value across the expected relationship. This calculator separately reports total revenue and gross profit using your average revenue, margin and lifetime assumptions.

What is the difference between revenue LTV and gross-profit LTV?

Revenue LTV is revenue per cycle times cycles. Gross-profit LTV also multiplies by gross margin to account for direct service or goods costs; it is not net profit.

How do I calculate customer lifetime from churn?

For this simplified model, divide 1 by customer churn as a decimal per selected cycle. A 5% monthly rate gives 20 monthly cycles. Revenue and churn must use the same cycle.

Why is 1/churn only an estimate?

It assumes a constant churn probability and geometric-style retention. Actual cohorts can differ by tenure, seasonality, onboarding, expansion, contraction and reactivation.

How does gross margin affect LTV?

It scales revenue LTV into gross-profit LTV. At fixed revenue and lifetime, doubling a positive margin doubles modeled gross-profit LTV.

What is CAC?

Customer acquisition cost is average acquisition spending per newly acquired customer. It is an optional independent input used for the ratio, surplus and simplified recovery time.

How is LTV:CAC calculated?

Divide gross-profit LTV by CAC. A $1,512 LTV and $400 CAC give 3.78×. Zero CAC makes this ratio undefined; there is no business quality score.

How is CAC payback calculated?

Divide CAC by revenue per cycle times gross margin. It assumes even revenue and stable margin without onboarding delay or early churn; zero gross profit has no finite recovery.

How does improving retention affect LTV?

Under unchanged revenue and margin, extra active cycles increase LTV linearly. In the simplified churn model, lower positive churn increases estimated lifetime and value; scenario results do not guarantee an improvement.

Does this calculator model cohort retention or expansion revenue?

No. The chart is linear cumulative gross profit for one customer remaining active over the modeled lifetime. It does not model a survival curve, expansion, contraction, reactivation or customer cohorts.

Sources

Reviewed October 3, 2026. These sources explain terminology and metric concepts; the explicit calculations and conventions above define this calculator. Sources do not endorse BuzCalculator or a universal formula.

• ChartMogul: Customer lifetime value — simplified SaaS metrics and limitations (opens in a new tab)
• ChartMogul: CAC payback — gross-margin-adjusted recovery (opens in a new tab)
• Corporate Finance Institute: Gross profit and gross margin (opens in a new tab)