Meant to be read alongside this site’s CAC calculator — a common benchmark is LTV at least three times CAC, and this calculator reports that ratio directly.
How it works
Average customer lifespan is the inverse of churn rate — a 5% monthly churn implies a 20-month average lifespan. Multiplying revenue per period by gross margin and by that lifespan gives LTV, the total gross profit an average customer generates before churning.
What this does not include
This uses a simple average-lifespan model, which assumes a constant churn rate — real customer cohorts often churn faster early on and more slowly once established, which this simplified model doesn’t capture.
How to use this calculator
- Enter average revenue per customer per period, gross margin, and churn rate.
- Optionally enter CAC to see the LTV:CAC ratio.
Frequently asked questions
What’s a healthy LTV:CAC ratio?
A commonly cited benchmark is 3:1 or better — well below that can mean growth is unprofitable at scale, even if the business looks fine on revenue alone.
Why does a small change in churn move LTV so much?
Because average lifespan is the inverse of churn — going from 5% to 4% monthly churn moves average lifespan from 20 to 25 months, a proportionally large swing in LTV.
Should LTV use revenue or gross profit?
Gross profit is more meaningful for comparing against CAC, since CAC is a real cash cost — this calculator applies gross margin to revenue for exactly that reason.
