Customer Lifetime Value Calculator
Divide the gross profit one customer leaves each month by the churn rate. At 30,000 a month with an 80% gross margin, 24,000 is left monthly, and 3.5% monthly churn means an average 28.6 months, so lifetime value is 24,000 ÷ 0.035 = 685,714. Dividing by churn and multiplying by the average lifetime are the same operation. Note there is another LTV entirely: in mortgages, loan-to-value is the loan against the property price and has nothing to do with this page.
Your numbers
Customer lifetime value
685,714
Average lifetime
28.6mo
Gross profit a customer a month
24,000
Formula
Customer lifetime value = Revenue per customer a month × Margin ÷ 100 ÷ (Monthly churn ÷ 100)
Use gross profit, not revenue. Feed in raw revenue without taking out hosting, payment fees and support and the answer inflates by the reciprocal of the margin — 1.25× at 80%, 3.3× at 30%. Level churn is also a fiction: where the first few months churn hardest, this figure overstates reality. It is also undiscounted, so money arriving three years out is counted at full face value.
What to enter
| Input | Default | Accepted range |
|---|---|---|
| Revenue per customer a monthWhat one customer pays a month — revenue, not profit. | 30,000 | 0 and up |
| Margin (%)Profit divided by the sale price. It can never exceed 100%. | 80 | 0 ~ 100 |
| Monthly churn (%)The share of starting customers who left; inverted, it gives the average lifetime. | 3.5 | 0 ~ 100 |
Step by step
Quick reference table
Results when only Revenue per customer a month changes and everything else stays put.
| Revenue per customer a month | Customer lifetime value | Average lifetime (mo) | Gross profit a customer a month |
|---|---|---|---|
| 15,000 | 342,857 | 28.6 | 12,000 |
| 22,500 | 514,286 | 28.6 | 18,000 |
| 30,000 | 685,714 | 28.6 | 24,000 |
| 45,000 | 1,028,571 | 28.6 | 36,000 |
| 60,000 | 1,371,429 | 28.6 | 48,000 |
What each result means
| Result | At default values |
|---|---|
| Customer lifetime valueTotal gross profit a customer leaves before churning, undiscounted. | 685,714 |
| Average lifetime (mo)Average lifetime if churn holds level — 100 divided by the churn rate. | 28.6 |
| Gross profit a customer a monthGross profit one customer leaves monthly, after hosting and payment fees. | 24,000 |
Common mistakes
Use gross profit, not revenue. Feed in raw revenue without taking out hosting, payment fees and support and the answer inflates by the reciprocal of the margin — 1.25× at 80%, 3.3× at 30%. Level churn is also a fiction: where the first few months churn hardest, this figure overstates reality. It is also undiscounted, so money arriving three years out is counted at full face value.
Glossary
- Revenue per customer a month
- What one customer pays a month — revenue, not profit.
- Margin
- Profit divided by the sale price. It can never exceed 100%.
- Monthly churn
- The share of starting customers who left; inverted, it gives the average lifetime.
- Customer lifetime value
- Total gross profit a customer leaves before churning, undiscounted.
- Average lifetime
- Average lifetime if churn holds level — 100 divided by the churn rate.
- Gross profit a customer a month
- Gross profit one customer leaves monthly, after hosting and payment fees.
Frequently asked questions
Q. How is Customer Lifetime Value Calculator calculated?
Customer lifetime value = Revenue per customer a month × Margin ÷ 100 ÷ (Monthly churn ÷ 100) — Divide the gross profit one customer leaves each month by the churn rate. At 30,000 a month with an 80% gross margin, 24,000 is left monthly, and 3.5% monthly churn means an average 28.6 months, so lifetime value is 24,000 ÷ 0.035 = 685,714. Dividing by churn and multiplying by the average lifetime are the same operation. Note there is another LTV entirely: in mortgages, loan-to-value is the loan against the property price and has nothing to do with this page.
Q. Can you walk through an example?
With Revenue per customer a month 30,000, Margin 80%, Monthly churn 3.5%, the answer is Customer lifetime value 685,714.
Q. What do I need to enter?
Enter Revenue per customer a month, Margin, Monthly churn. The result recalculates as you type, and an empty box counts as zero.
Q. How much does the answer move if I change a number?
Changing only Revenue per customer a month moves the answer to Revenue per customer a month 15,000 → Customer lifetime value 342,857 and Revenue per customer a month 60,000 → Customer lifetime value 1,371,429. The table below lays out five steps.
Q. How are the numbers rounded?
Money is shown to the nearest whole unit, percentages to one decimal place and everything else to two. What you see is rounded; the calculation itself carries the unrounded value forward.
Q. Anything to watch out for?
Use gross profit, not revenue. Feed in raw revenue without taking out hosting, payment fees and support and the answer inflates by the reciprocal of the margin — 1.25× at 80%, 3.3× at 30%. Level churn is also a fiction: where the first few months churn hardest, this figure overstates reality. It is also undiscounted, so money arriving three years out is counted at full face value.
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