About the Customer LTV Calculator
What is the Customer LTV Calculator?
Customer lifetime value (LTV) is the gross profit a typical customer brings in over the whole relationship. It sets the ceiling on what you can afford to spend acquiring a customer.
The calculator uses monthly revenue per customer, gross margin and monthly churn. With a discount rate, it also gives the present value of those future profits.
How to use the Customer LTV Calculator
- Average Revenue per Customer per Month (₹) (sample: 1,500)
- Gross Margin (%) (sample: 70)
- Monthly Churn Rate (%) (sample: 3)
- Annual Discount Rate (%, 0 to skip) (sample: 12)
- Press Calculate Customer Lifetime Value (results also refresh as you type). The result card shows the Customer Lifetime Value (LTV), along with Undiscounted LTV (margin ÷ churn), Average customer lifetime, Gross profit per customer per month and Revenue LTV (before margin).
Formula used
LTV = ARPU × Gross margin ÷ Monthly churn
- Discounted LTV = ARPU × margin × (1 + d) ÷ (d + churn), with d the monthly discount rate
- Average lifetime = 1 ÷ monthly churn
Use gross profit, not revenue, so that LTV can be compared with acquisition cost.
Worked example
These are the sample values already filled in the calculator above, and the result it returns for them:
| Input | Sample value |
|---|---|
| Average Revenue per Customer per Month (₹) | 1,500 |
| Gross Margin (%) | 70 |
| Monthly Churn Rate (%) | 3 |
| Annual Discount Rate (%, 0 to skip) | 12 |
| Result | Value |
|---|---|
| Customer Lifetime Value (LTV) | ₹26,842 |
| Undiscounted LTV (margin ÷ churn) | ₹35,000 |
| Average customer lifetime | 33.3 months |
| Gross profit per customer per month | ₹1,050 |
| Revenue LTV (before margin) | ₹50,000 |
SaaS benchmarks
| Metric | Healthy benchmark |
|---|---|
| LTV : CAC | 3× or more |
| CAC payback | Under 12 months (SMB), under 18–24 months (enterprise) |
| Gross margin | 70–80% or more for software |
| Monthly logo churn | Under 2% (SMB), under 1% (enterprise) |
| Net revenue retention | 100% or more; 120%+ is best-in-class |
| Rule of 40 | Growth % + profit margin % ≥ 40 |
Tips for using the Customer LTV Calculator
- Reducing churn is often the fastest way to raise LTV.
- Calculate LTV by customer segment; averages can hide unprofitable groups.