Customer Lifetime Value Calculator
CLV with churn, margins, and discount rate.
Customer Lifetime Value (CLV) estimates total profit from a customer over their relationship. Formula: CLV = (ARPU × Gross margin) / Churn rate. For subscription businesses, ARPU is average revenue per user per month. Churn is the monthly cancellation rate. A 5% monthly churn means average customer lifespan of ~20 months. Use this to set CAC targets (aim for LTV:CAC of 3:1 or higher) and prioritize retention.
Inputs
Results
CLV (simple): $735
Avg. customer lifespan: 20 months
CLV (discounted): ~$580
Insights
Formula
CLV (simple) = (ARPU * Margin) / Churn_rate Lifespan = 1 / Churn_rate (months) CLV (discounted) = sum of (ARPU * Margin) / (1 + r)^t for t=1 to lifespan
Input Definitions
What does each input mean?
- ARPU per month
- Average revenue per user per month. For subscriptions, use plan price.
- Gross margin %
- Percentage of revenue that is gross profit. SaaS often 70–90%.
- Monthly churn %
- Percentage of customers who cancel each month. 5% ≈ 20-month lifespan.
- Discount rate %
- Time value of money. Future dollars worth less than today. 10% is common.
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Understanding What Each Customer Is Actually Worth to You
Customer lifetime value is one of the most important numbers in any subscription or repeat-purchase business, and one of the least accurately calculated. Knowing true LTV lets you set rational customer acquisition budgets, prioritize retention over acquisition when it makes financial sense, and compare the value of different customer segments. This calculator walks you through a proper LTV model.
Use it when you’re setting target CAC for paid acquisition channels, when you want to understand the revenue impact of improving retention by even a small percentage, or when you’re building investor materials that include unit economics. A business with genuinely high LTV can justify acquisition costs that look aggressive on the surface — this tool shows you whether yours qualifies.