Free tool
LTV Calculator
Customer lifetime value with the optional LTV:CAC ratio every investor will compute when they see your model. LTV = (ARPC/12) × gross margin × customer lifetime, where lifetime is the reciprocal of monthly churn. Add a CAC and the calculator classifies the ratio into the industry-standard bands (>5× exceptional · 3-5× healthy · 2-3× OK · 1-2× suspect · <1× bad).
Frequently asked questions
What is LTV (customer lifetime value)?▾
LTV is the total gross profit a customer will produce over the time they stay subscribed. Simple formula: (annual ARPC / 12) × gross margin × customer lifetime in months, where customer lifetime = 1 / monthly churn rate. So a $12k/yr customer at 75% GM and 2% monthly churn produces ~$37,500 of LTV over a 50-month average lifetime.
What is the standard LTV:CAC band?▾
Industry consensus (SaaStr, ICONIQ, Bessemer): >5× exceptional (likely under-investing in growth), 3-5× healthy (the textbook target), 2-3× OK (typical at growth stage, watch margin/churn), 1-2× suspect (each customer barely profitable), <1× bad (losing money per customer). The 3× number is the most-cited target, it builds in margin for CAC inflation and lengthening payback at scale.
Why does churn matter so much?▾
Churn is the single biggest LTV lever. Lifetime is 1/monthly_churn, so dropping monthly churn from 3% to 1.5% doubles the lifetime (33 → 67 months) and doubles the LTV. ARPC and gross margin improvements are linear; churn improvements are hyperbolic. Most SaaS efficiency gains come from churn reduction, not pricing or cost cutting.
When does this simple formula break down?▾
When churn isn't constant. Real cohorts show heavy early churn that flattens out, month-12 retention is much higher than month-1 retention would predict using a flat churn rate. Use this calculator for back-of-envelope; use cohort-by-cohort retention curves (and net dollar retention) for diligence.
Why use gross contribution and not revenue?▾
Revenue is not what pays back CAC, gross profit is. A customer paying $1,000/mo at 40% gross margin contributes $400/mo of gross profit, not $1,000. The cost of revenue (hosting, support, payment processing, licensing) comes out first. LTV with raw revenue overstates by 1/(gross margin), which is significant for low-margin SaaS.
Can I share my calculation?▾
Yes, every input is encoded in the URL. The 'Copy share link' button copies the current URL to your clipboard. Send it to your board, head of growth, or investor and they open the calculator with the same numbers.
SaaS efficiency suite
Pair LTV with the rest of the suite. Healthy companies score well on all four; discrepancies are diagnostic.
Companion view
CAC Payback →
Same CAC denominator as the LTV:CAC ratio, but expressed in months-to-payback instead of multiple.
Whole-company view
Burn Multiple →
Total burn / net new ARR. Per-customer healthy ≠ whole-company healthy.
Per-cohort view
Magic Number →
Annualized net new ARR / quarterly S&M. The GTM-motion efficiency view.
Time view
Runway →
Efficiency tells you whether to invest. Runway tells you how long you have to decide.
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