Plainhub
Free tool

Customer LTV calculator

Lifetime value from churn and margin, plus your LTV:CAC ratio and how many months it takes to earn back what you spend acquiring a customer. Nothing stored.

LTV
€3,200
margin-adjusted
Avg lifetime
33.3
months
LTV : CAC
8.0x
3x or better is healthy
CAC payback
4.2
months to recover CAC

At 3x or above the unit economics support spending more to acquire customers, as long as CAC payback stays inside your runway.

The LTV formula

Lifetime value is how much gross profit one customer produces before they leave:

average lifetime = 1 / monthly churn rate
LTV              = ARPA x gross margin x average lifetime
LTV : CAC        = LTV / cost to acquire a customer
CAC payback      = CAC / (ARPA x gross margin)

Churn does the heavy lifting. At 3 percent monthly churn the average customer stays about 33 months; at 6 percent it is 17. Halving churn does more for LTV than any price increase you are likely to get away with, which is why retention work usually beats acquisition work in an early SaaS.

Use gross margin, not revenue. Counting the full subscription price as lifetime value ignores hosting, support and payment fees, and produces a number that justifies spending you cannot actually afford. For the wider picture, read the 12 SaaS metrics that matter and what is MRR.

Common questions

How do you calculate customer lifetime value?

Multiply the average monthly revenue per customer by your gross margin, then divide by your monthly churn rate. LTV = (ARPA x gross margin) / churn. The churn rate is what sets the average customer lifetime: 3 percent monthly churn means the average customer stays about 33 months.

What is the LTV formula for SaaS?

LTV = (average revenue per account x gross margin %) / monthly churn rate. Using gross margin rather than raw revenue matters, because the cost of hosting and supporting a customer is money you never keep.

What is a good LTV to CAC ratio?

Three to one is the widely used benchmark. Below 1x you lose money on every customer acquired. Between 1x and 3x the business works but has little room to fund growth. Above 3x the unit economics support spending more on acquisition, provided CAC payback fits inside your runway.

What is CAC payback period?

The number of months of gross profit needed to recover what you spent acquiring a customer: CAC / (ARPA x gross margin). Under 12 months is generally considered healthy for SaaS. It matters more than LTV:CAC for an early startup, because it is measured in cash and time you actually have.

Why does LTV go to infinity when churn is zero?

The formula divides by churn, so zero churn implies customers stay forever and lifetime value is unbounded. In practice no cohort has zero churn. If your measured churn is zero, your sample is too small or your window is too short, so use a longer period.

LTV means nothing without runway

A 12-month CAC payback is fine with two years of runway and fatal with eight months. Plainhub keeps both live in one place: type what happened and your runway, burn and MRR move with it.

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