LTV Calculator — SaaS Customer Lifetime Value

The revenue mistake breaks LTV

When you multiply ARPU by customer lifetime, the most common error is using total revenue instead of gross margin. A customer paying $100/month looks valuable until you account for COGS, payment processing, and hosting — the bottom line is $75. Using $100 inflates your LTV by 33%, making bad unit economics look serviceable and hiding when you need to cut churn or raise prices. This mistake cascades: it tells you to spend more on acquisition than you can afford, or to accept churn you should be fighting.

What this calculator does

The tool enforces the right formula: LTV = ARPU × gross margin × (1 / churn). Enter your monthly revenue per customer, the percentage that survives after all direct costs, and your monthly churn rate as a percentage. The calculator outputs both your customer lifetime value and expected tenure in months. A 2% monthly churn rate works out to roughly 50 months of expected customer life; a 5% rate drops that to 20 months. This relationship is why churn improvements compound: dropping churn from 5% to 4% extends tenure from 20 to 25 months, increasing LTV by 25% with no change to your pricing or margins.

The zero-churn edge case

If you enter 0% churn, the calculator shows ∞ — mathematically correct, but not actionable. No customer truly stays forever. Use realistic churn: if you retain 95% of customers monthly, that's 5% churn. If you lose one customer per 200 monthly cohort, that's 0.5% churn.

What stays out of scope

This calculator does not forecast LTV growth from retention improvements or expansion revenue. It takes churn as given and computes the lifetime value of today's cohort. For how your LTV compares to what you spend acquiring customers, see the CAC Payback Period Calculator.