The method
How it is worked out
LTV ≈ ARPU × gross margin ÷ monthly churn rate
- ARPU
- Average monthly revenue per customer
- gross margin
- Gross profit percentage
- churn
- Monthly customer churn
LTV Calculator
Estimate simplified subscription customer lifetime value from average monthly revenue, gross margin and monthly churn. The result updates as you type so you can compare scenarios quickly.
Keep in mind
What it leaves out
- Simplified modelReal cohort behaviour can differ materially.
- ExpansionUpsells and contraction are not modelled.
- DiscountingFuture cash flows are not discounted.
Use the calculator to compare scenarios rather than as a guaranteed forecast.
About the LTV Calculator
Estimate the lifetime gross profit associated with an average subscription customer from monthly revenue per customer, gross margin and monthly churn. The result helps teams judge how much room they may have to spend on acquisition, while recognising uncertainty in customer retention.
How it works and an example to tryShow less
How to use the result
The simplified model multiplies average monthly revenue per customer by gross margin and divides by the monthly churn rate. A lower churn assumption raises the forecast lifetime value substantially. It assumes steady averages and no expansion revenue; it does not accept a separate fixed customer-lifespan input or model cohort-specific retention curves.
Example to try
For a consumer app charging 10 a month, set the gross margin and monthly churn to your actual observed figures. Compare a 6% churn rate with a lower rate while leaving price unchanged. Do not use an optimistic retention assumption solely to justify higher marketing spend.
Put it to work
Try it on a real situation
Load an example
What moves the result most
Worked out from your figures above. Tap a row to try it.
Who uses it, and when
Subscription and app businesses setting an acquisition budget, founders defending a marketing plan to investors, and product teams measuring the value of a retention improvement.
Mistakes worth avoiding
- Using an optimistic churn figure that makes any acquisition spend look justified.
- Ignoring gross margin, so revenue is mistaken for profit.
- Assuming lifetime value from year one holds for customers acquired later at higher cost.
Questions
What does the LTV Calculator do?
Estimate simplified subscription customer lifetime value from average monthly revenue, gross margin and monthly churn.
How should I use the result?
The simplified model multiplies average monthly revenue per customer by gross margin and divides by the monthly churn rate. A lower churn assumption raises the forecast lifetime value substantially. It assumes steady averages and no expansion revenue; it does not accept a separate fixed customer-lifespan input or model cohort-specific retention curves.
Does TechBullion store the information I enter?
The core calculation or transformation runs in your browser. Normal website security and analytics may still record page-level events, but the tool does not need to create a public record from your inputs.
What mistakes do people make with a ltv calculator?
Using an optimistic churn figure that makes any acquisition spend look justified. Ignoring gross margin, so revenue is mistaken for profit. Assuming lifetime value from year one holds for customers acquired later at higher cost.
Is the result guaranteed?
No. Use the result as a practical check or planning aid and verify important decisions with the relevant primary source, provider or professional advice.
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Calculator results are estimates based on the figures entered and are not financial, investment, legal or tax advice.