BYTETOOLS

Customer Lifetime Value Calculator

Calculate LTV from ARPU, gross margin and churn, then check it against your CAC for the LTV:CAC ratio, payback period and a health band.

$1,600
LTV (gross margin)
$2,000
LTV (revenue only)
20.0 mo
Average lifetime
4.00 : 1
LTV : CAC
5.0 mo
CAC payback
$80.00
Gross profit per customer, per month
1.67
Lifetime in years

4.00:1 — In the 3:1 to 5:1 range that is widely treated as healthy for a subscription business.

LTV = ARPU × gross margin ÷ churn rate  ·  CAC payback = CAC ÷ (ARPU × gross margin)  ·  lifetime = 1 ÷ churn

Worked example: $100 ARPU, 80% gross margin and 5% monthly churn gives a 20-month lifetime and an LTV of 100 × 0.80 ÷ 0.05 = $1,600. Against a $400 CAC that is a 4:1 ratio with a 5-month payback.

The 1 ÷ churn model assumes churn stays constant for the life of the cohort. Real businesses usually see high churn in the first months and much lower churn afterwards, which makes this estimate conservative for survivors and optimistic for brand-new signups. Using gross margin rather than raw revenue is the version investors expect. Everything is calculated in your browser — no figures are uploaded.

What is the Customer Lifetime Value Calculator?

The ByteTools Customer Lifetime Value Calculator uses the standard subscription formula — LTV = ARPU × gross margin ÷ churn rate — to show what an average customer is worth over their whole relationship with you.

  • Gross-margin LTV alongside revenue-only LTV
  • Average customer lifetime from 1 ÷ churn, in months and years
  • LTV:CAC ratio with banding against the 3:1 benchmark
  • CAC payback period in months
  • Clear warning instead of a nonsense number when churn is zero
  • Runs entirely in your browser with no data uploaded

How to use the Customer Lifetime Value Calculator

  1. 1

    Enter your average revenue per customer per month (ARPU).

  2. 2

    Enter your gross margin percentage — revenue minus the cost to serve.

  3. 3

    Enter your monthly customer churn rate.

  4. 4

    Add your customer acquisition cost to unlock the ratio and payback figures.

  5. 5

    Read the LTV, LTV:CAC ratio, payback months and the health band.

About the Customer Lifetime Value Calculator

The ByteTools Customer Lifetime Value Calculator uses the standard subscription formula — LTV = ARPU × gross margin ÷ churn rate — to show what an average customer is worth over their whole relationship with you. It also reports the raw revenue LTV so you can see how much the margin assumption is doing.

Add your customer acquisition cost and it computes the two numbers investors actually ask about: the LTV:CAC ratio and the CAC payback period in months. The result is banded against the widely used 3:1 benchmark, with an honest note when the ratio is below 1 and every new customer is losing money.

Using gross margin rather than raw revenue is the version investors expect, and the 1 ÷ churn lifetime model is stated plainly along with its limitation. All figures are typed by you and calculated in your browser — nothing is uploaded.

Frequently asked questions

How do you calculate customer lifetime value?

The standard subscription formula is ARPU × gross margin ÷ churn rate. At $100 monthly ARPU, an 80% gross margin and 5% monthly churn, LTV is 100 × 0.80 ÷ 0.05 = $1,600, based on an average lifetime of 20 months.

What is a good LTV to CAC ratio?

Three to one is the figure most investors quote as healthy: you recover roughly three times what a customer costs to acquire. Below 1:1 you lose money on every sale. Far above 5:1 often means you are underspending on growth rather than being unusually efficient.

Should LTV use revenue or gross margin?

Gross margin. Revenue-based LTV ignores what it costs you to serve the customer — hosting, support, payment fees — and can overstate value dramatically for a low-margin product. This calculator shows both so the gap is visible.

What is CAC payback period?

It is how many months of gross profit it takes to earn back what you spent acquiring the customer: CAC ÷ (ARPU × gross margin). A $400 CAC against $80 monthly gross profit pays back in five months. Under 12 months is generally considered strong.

How accurate is the 1 ÷ churn lifetime model?

It assumes churn stays constant for the whole life of a cohort, which is rarely true — most products churn heavily in the first months and much less afterwards. That makes the estimate optimistic for brand-new signups and conservative for long-tenured survivors, so treat it as a directional planning number rather than a forecast.

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