LTV Calculator
Estimate customer Lifetime Value (LTV) using ARPA, gross margin, and churn rate.
Prefer an explanation? Read the guide.
LTV: How to estimate Lifetime Value (and when not to)ARPU: how to use Average Revenue Per User effectivelyLTV:CAC ratio: how to interpret the ratio (and avoid mistakes)
Average revenue per account (monthly).
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Tip: you can type commas (e.g., 10,000).
Example
Using the default inputs, the result is:
$5,333.33
- ARPA per month
- $200
- Gross margin
- 80%
- Monthly churn
- 3%
Formula
LTV = (ARPA × Gross Margin) ÷ Churn Rate
- Churn is steady over time (a simplifying assumption).
- ARPA and churn use the same time unit (monthly).
FAQ
Should I use revenue churn or customer churn?
This calculator uses customer churn for simplicity. For many SaaS businesses, revenue churn (NRR/GRR) is more representative.
How to interpret
How to use this LTV model
- Use a consistent time unit: monthly ARPA with monthly churn.
- Gross margin should reflect direct costs (COGS), not operating expenses.
- Treat this as a quick estimate; cohort-based LTV is more accurate.
Common pitfalls
- Using revenue churn (NRR/GRR) but labeling it as customer churn.
- Using annual churn with monthly ARPA (mismatched units).
- Ignoring expansion/upsell when churn is low.
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