Short answer
Customer Lifetime Value (LTV) Calculator: what it does
LTV is monthly revenue per customer × gross margin ÷ monthly churn. Healthy businesses aim for LTV at least three times CAC and a payback period under 12 months.
Last updated 3 August 2026
Here's one we ran earlier.
£49/month, 80% margin, 4% churn, £180 CAC
LTV — 980
Lifetime value£49 × 80% ÷ 4% monthly churn.
LTV:CAC — 5.4:1
RatioComfortably above 3:1. Room to spend more on acquisition.
Payback — 4.6 months
Payback£180 ÷ £39.20 margin per month.
Three steps, no account.
Use gross margin, not revenue
Revenue-based LTV flatters you. Margin-based LTV is what you can actually spend to win a customer.
Use real churn
Take the last three months of cancellations over starting customers. Guessing low churn inflates LTV fast.
Fix the weakest number
Low ratio from churn: fix onboarding. From CAC: change channel. From ARPU: revisit pricing.
Common questions.
What is a good LTV:CAC ratio?
3:1 or better. Under 1:1 loses money on every customer; far above 5:1 often means you're under-investing in growth.
What if my churn is zero?
Then the formula breaks. Cap lifetime at a realistic number such as 36 months until you have real churn data.
What's CAC payback?
Months of gross margin needed to earn back what you spent to win the customer.
Does this cost anything?
No. It's free, no account needed, and you can run it as many times as you like.
Use these next.
CAC Calculator
Find your true customer acquisition cost
OpenFree calculatorChurn & Retention Calculator
See how much revenue you lose every month
OpenFree calculatorPricing Calculator
Work out what to charge from your costs and margin
OpenGoing deeper? Budget answers — straight answers from the rest of the library.
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