Customer Lifetime Value (LTV) Calculator

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Illustrative calculation; verify inputs and assumptions before relying on it.

LTV—

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LTV = ARPA × (1 / CHURN)
Variable Meaning
ARPA Average revenue per account.
CHURN Customer churn rate.

Worked example

ARPA (monthly)
$500
Monthly Churn
2%
→ LTV
$25,000

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What LTV measures

Published by 4NLab · Updated · Our methods

LTV is customer lifetime value, the estimated revenue value of a customer over their lifespan.

Prepare your inputs

  1. Use monthly ARPA and monthly customer churn from a comparable customer segment. Enter 2 for a 2% churn rate in the calculator.
  2. Divide ARPA by churn expressed as a decimal. For a gross profit view, multiply that revenue estimate by the segment’s gross margin.
  3. Recalculate with less favorable churn and margin assumptions. Compare the range with actual cumulative revenue or gross profit from older customer cohorts.

Formula

LTV = ARPA × (1 / CHURN)
Variable Meaning
ARPA Average revenue per account.
CHURN Customer churn rate.

Check the sample calculation

Worked example

ARPA (monthly)
$500
Monthly Churn
2%
→ LTV
$25,000

Before using the result

  • This simple formula assumes stable revenue and a constant churn probability, and does not discount future cash flows.
  • At zero observed churn the model cannot estimate a finite lifetime. A short period with no cancellations does not prove an infinite lifetime.
  • Keep revenue LTV and gross profit LTV clearly labeled, especially when comparing an LTV/CAC ratio with an external benchmark.

A dash means the result is undefined for the inputs, such as division by zero. Review the assumptions and input errors before interpreting it.

Read the LTV guide for a business scenario, interpretation, and frequently asked questions.

Check how your team defines LTV before relying on the result.

Sources and methodology

The references below explain the underlying methods. Our worked scenarios use hypothetical figures; they are not company results or current market benchmarks.

Found an error or a definition that differs from your reporting? Send a correction with the page URL and the method you use.