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LTV Calculator
Enter Monthly ARPU, Monthly customer churn and Gross margin — every figure updates as you type. Nothing you type leaves your browser.
How do you calculate LTV?
Margin-adjusted LTV
$2,743
The contribution one customer produces over their lifetime. Use this figure everywhere.
- Unadjusted revenue LTV
- $3,429Total revenue billed over the same lifetime. Overstates what the customer is worth to you.
- Implied customer lifetime
- 28.6Months, derived as 1 ÷ churn. Sanity-check it against how long you have actually been operating.
Results are rounded for display; the calculation runs at full precision.
The maths
How LTV is calculated
The formula this calculator runs, written out so you can check it against your own model rather than trust a black box.
LTV = (ARPU ÷ Monthly churn rate) × Gross margin- ARPU
- Average monthly recurring revenue per customer. Divide total MRR by active customers — exclude trials and internal accounts or the figure drifts low.
- Monthly churn rate
- Share of customers lost per month, as a decimal. Enter 3.5 for 3.5%; the calculator converts it. 1 ÷ churn gives the average customer lifetime in months.
- Gross margin
- Revenue remaining after the direct cost of serving a customer: infrastructure, payment processing, support headcount and any usage-priced vendor in the delivery path.
Reading the result
What the number is telling you
Bands are directional, not verdicts. Stage, price point and contract length move every one of them, so treat these as a starting point for the conversation rather than a grade.
- Implied lifetime under 12 months
- Churn above roughly 8% per month. Common in self-serve SMB products and in the first year of a new product. LTV is real but small, so acquisition only clears if payback is fast — under six months — and the formula is at its most reliable here because you are extrapolating barely beyond observed data.
- Implied lifetime 12–36 months
- Churn between roughly 2.8% and 8%. The typical band for SMB SaaS. The estimate is credible and worth acting on, though it is still sensible to hold LTV to a 24-month cap when it feeds a hiring or budget decision.
- Implied lifetime 36–100 months
- Churn between roughly 1% and 2.8%, usually mid-market or annual contracts. The arithmetic is now projecting well past anything you have measured. Treat it as directional, and check it against a cohort retention curve before it appears in a fundraising deck.
- Implied lifetime over 100 months
- Churn under 1% per month. The formula has stopped being informative — it is claiming a decade of retention on the strength of a handful of quarters. Switch to observed cohort retention, or cap the lifetime at a term you can actually defend.
Why the margin adjustment is not optional
The version of this formula that circulates most widely — ARPU divided by churn — returns lifetime revenue. It is the number a customer pays you, not the number you keep. A business running 80% gross margin that quotes revenue LTV overstates the value of every customer by 25%, and that error flows straight into the LTV:CAC ratio, where it can turn a 2.4:1 business into an apparently healthy 3:1 one.
The reason gross margin belongs in the formula is that acquisition costs are paid in cash and lifetime value has to be measured in the same currency. If serving a customer costs you 20 cents on the dollar, only 80 cents is ever available to repay what you spent winning them. That is the money you are actually comparing against CAC.
The churn rate you choose decides the answer
LTV is far more sensitive to churn than to price. At the defaults above, adding 20 to ARPU moves LTV by roughly 460. Moving churn from 3.5% to 2.5% moves it by nearly 1,100 — for the same revenue. This is arithmetic, not strategy advice, but it explains why retention work reprices a business in a way that a price rise usually does not.
Two rules keep the input honest. Use logo churn rather than revenue churn: the formula counts customers, and net revenue churn can be negative once expansion is included, which produces a nonsensical result. And measure churn over a window long enough to be stable — a single month with two extra cancellations can swing a small base by a full percentage point.
Where the formula stops working
ARPU ÷ churn assumes a constant hazard rate: the same share of customers leaves every month, forever. Real retention curves flatten — the customers who survive twelve months churn at a much lower rate than the ones who survive one. Below roughly 1% monthly churn the formula projects lifetimes of a decade or more from a few quarters of observed data, and the output becomes arithmetic rather than evidence.
- Cap it for planning. Many finance teams cap LTV at 36 or 60 months regardless of what the division returns, which keeps the figure defensible in a board pack.
- Prefer cohorts when you have them. Summing observed retained revenue by cohort makes no distributional assumption at all.
- Segment before you average. A blended LTV across a self-serve tier churning at 6% and an annual tier churning at 1% describes no customer who exists.
Bastle computes churn, ARPU and per-customer lifetime value from your billing data on your own definitions, so the inputs to this formula stop being estimates you assemble by hand. See how LTV is defined or how segmentation splits it.
Definition
Where LTV gets argued about
A calculator settles the arithmetic, not the definition — and the definition is where most disagreements about this number actually live. The glossary entry covers the conventions, the edge cases and how Bastle handles each one.
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LTV:CAC Ratio Calculator
The LTV:CAC ratio divides margin-adjusted lifetime value by fully loaded acquisition cost to show how much contribution each acquisition dollar returns.
Learn moreCAC Calculator
Customer acquisition cost is everything spent to win customers divided by the customers actually won.
Learn moreCAC Payback Period Calculator
CAC payback period is the number of months a customer's gross margin must run before it repays what you spent acquiring them.
Learn moreFrequently asked questions
Should LTV use revenue or gross margin?
Should I use logo churn or revenue churn in the formula?
Why does LTV look absurd when churn is very low?
Does this account for expansion revenue?
How does Bastle calculate lifetime value?
Stop recalculating LTV by hand.
Connect Stripe and Bastle keeps LTV current — backfilled to your first customer, segmentable, and traceable to the invoices behind it. Free while in beta, no card required.