---
title: "Customer lifetime value calculator"
url: "https://trialvalid.com/customer-lifetime-value-calculator.md"
canonical_url: "https://trialvalid.com/customer-lifetime-value-calculator"
last_updated: "2026-10-19"
type: "tool"
summary: "At $100 a month, 80% margin and 2.5% monthly churn, a customer is worth $3,200 in margin."
related: ["https://trialvalid.com/churn-rate-calculator.md", "https://trialvalid.com/mrr-calculator.md", "https://trialvalid.com/trial-conversion-rate-calculator.md", "https://trialvalid.com/roi-calculator.md", "https://trialvalid.com/saas-metrics.md"]
---

# Customer lifetime value calculator

> **For AI agents:** the complete index of TrialValid pages is [llms.txt](https://trialvalid.com/llms.txt). Every page is also served as markdown at its URL plus .md.

At $100 a month, 80% margin and 2.5% monthly churn, a customer is worth $3,200 in margin.

Example with the default inputs:

| Input | Value |
| --- | --- |
| Average revenue per account, monthly (ARPA) | 100 |
| Gross margin | 80 |
| Monthly customer churn | 2.5 |
| Customer acquisition cost (optional) | 800 |

| Result | Value |
| --- | --- |
| Monthly margin per account | $80 |
| Average customer lifetime | 40 months |
| Customer lifetime value (LTV) | $3,200 |
| Lifetime revenue per customer | $4,000 |
| LTV to CAC | 4.0 to 1 |
| CAC payback | 10 months |

Working:

1. Monthly margin: $100 times 80% is $80 a month.
2. Lifetime: 1 divided by 2.5% monthly churn is 40 months.
3. LTV: $80 divided by 2.5% is $3,200. Lifetime revenue, before costs, is $100 divided by 2.5%, which is $4,000.
4. LTV to CAC: $3,200 divided by $800 is 4.0 to 1.
5. CAC payback: $800 divided by $80 a month is 10 months.

## How the calculator works

Customer lifetime value is the margin an average customer brings in before they leave. Take the revenue one account pays each month, keep only the share left after the direct cost of serving it, and divide by the share of customers who cancel each month. The inverse of monthly churn is the average lifetime in months, so a lower churn rate lengthens the lifetime and raises the value at the same time.

In symbols: `margin per month = ARPA x gross margin`, `lifetime = 1 / churn`, `LTV = margin per month / churn`. Lifetime revenue before costs is `ARPA / churn`. With a customer acquisition cost, `LTV to CAC = LTV / CAC` and `payback = CAC / margin per month`. Money is held in cents and rounded half up at each step, so the figures match what you would get on paper.

## Worked examples

A low priced plan: $49 a month at 85% margin leaves $41.65 a month. At 3% monthly churn a customer stays 33.3 months on average, which gives $1,388.33 of lifetime value against a $300 acquisition cost.

| Step | Low priced plan |
| --- | --- |
| Monthly revenue per account | $49 |
| Gross margin | 85% |
| Monthly churn | 3% |
| Acquisition cost | $300 |
| Monthly margin per account | $41.65 |
| Average customer lifetime | 33.3 months |
| Customer lifetime value | $1,388.33 |
| LTV to CAC | 4.6 to 1 |
| CAC payback | 7.2 months |

A higher priced plan sold to teams: $400 a month at 70% margin and 1.2% monthly churn gives $23,333.33 over 83.3 months. Spending $6,000 to win that customer returns 3.9 to 1 and pays back in 21.4 months.

| Step | Team plan |
| --- | --- |
| Monthly revenue per account | $400 |
| Gross margin | 70% |
| Monthly churn | 1.2% |
| Acquisition cost | $6,000 |
| Monthly margin per account | $280 |
| Average customer lifetime | 83.3 months |
| Customer lifetime value | $23,333.33 |
| LTV to CAC | 3.9 to 1 |
| CAC payback | 21.4 months |

A plan that does not pay back: $30 a month at 60% margin and 8% monthly churn has an average lifetime of 12.5 months, but covering a $400 acquisition cost takes 22.2 months. The ratio is 0.6 to 1. On average these customers leave before they repay what it cost to win them.

## Lifetime value at common churn rates

The table keeps the other inputs at $100 a month and 80% margin and changes only monthly churn. Halving churn from 2.5% to 1.25% takes lifetime value from $3,200 to $6,400, because churn sits in the denominator.

| Monthly churn | Average lifetime | Lifetime value (to the dollar) |
| --- | --- | --- |
| 1% | 100 months | $8,000 |
| 2% | 50 months | $4,000 |
| 2.5% | 40 months | $3,200 |
| 3% | 33.3 months | $2,667 |
| 5% | 20 months | $1,600 |
| 10% | 10 months | $800 |

## Edge cases and how the tool treats them

- Churn of 0% is refused. Churn of 0% means customers never leave, so their lifetime is unbounded and lifetime value has no end. Enter a churn above 0%.
- Gross margin runs from 0 to 100. A margin of 0% gives a lifetime value of $0, and with an acquisition cost entered the tool reports that the cost never pays back.
- Leave the acquisition cost blank and the tool hides the ratio and the payback, keeping the other four results (4 rows at the defaults instead of 6).
- When payback is longer than the average lifetime, the working says so in plain words instead of showing a ratio that looks healthy.
- Use monthly churn of customers, not of revenue. If expansion revenue offsets cancellations, the simple formula understates value, and a cohort view is the better tool.

### What does this calculator measure?

Customer lifetime value, the margin an average customer contributes before cancelling. It is not loan to value, the mortgage ratio that shares the abbreviation LTV. At the defaults, $100 a month, 80% margin and 2.5% churn give $3,200.

### Why divide by churn?

If 2.5% of customers cancel each month, the average customer lasts 1 / 0.025 months, which is 40 months. Multiplying that lifetime by the monthly margin of $80 gives the lifetime value.

### Should I use revenue or margin?

Margin. Lifetime revenue at the defaults is $4,000, but $3,200 of that is left after the cost of serving the account. Comparing revenue with acquisition cost flatters the ratio.

### How is LTV to CAC read?

It divides lifetime value by what it cost to win the customer. With a $800 acquisition cost the defaults give 4.0 to 1. A ratio below 1 to 1 means customers do not repay their cost on average. Compare it with your own history and cash position.

### What is CAC payback?

The months of margin needed to recover the acquisition cost: $800 divided by $80 a month is 10 months at the defaults. A short payback frees cash to acquire the next customer sooner.

### What happens if churn is 0%?

The tool asks for a churn above 0%. With no cancellations the average lifetime has no end, so a lifetime value cannot be stated. Use the churn of your slowest cohort, or a small number you can defend, and say which you chose.

### Does a card at sign-up change the inputs?

It can change churn and the number of trials that become customers. Measure monthly churn on customers who reached their first payment, and keep trial sign-ups out of the churn denominator. The trial conversion calculator covers the step before the first payment.

## Related tools

Churn is the input that moves lifetime value most, so start with the [churn rate calculator](https://trialvalid.com/churn-rate-calculator.md) if you only have cancellation counts. The [MRR calculator](https://trialvalid.com/mrr-calculator.md) shows how new, expansion and lost revenue add up each month, and the [trial conversion rate calculator](https://trialvalid.com/trial-conversion-rate-calculator.md) covers the step before the first payment. To price a better trial conversion in revenue, try the [ROI calculator](https://trialvalid.com/roi-calculator.md). The [SaaS metrics glossary](https://trialvalid.com/saas-metrics.md) defines every term used here.

## Related

- [Churn Rate Calculator](https://trialvalid.com/churn-rate-calculator.md)
- [MRR calculator](https://trialvalid.com/mrr-calculator.md)
- [Trial Conversion Rate Calculator](https://trialvalid.com/trial-conversion-rate-calculator.md)
- [ROI Calculator for Trial Conversion](https://trialvalid.com/roi-calculator.md)
- [SaaS metrics glossary](https://trialvalid.com/saas-metrics.md)