SaaS & growth
LTV (Customer Lifetime Value)
Formula reviewed by Tahir Asif, CMA
The total gross-margin value a customer generates over their entire relationship with the business.
LTV estimates the total gross profit a customer will generate before they churn, based on their average revenue, gross margin, and expected lifetime (which is mathematically the inverse of the churn rate).
LTV is inherently a forward-looking estimate, not a historical fact — it depends on churn staying roughly stable, which makes it most reliable for a mature customer base with predictable retention and least reliable for a young company still learning its actual churn pattern.
LTV
(ARPU × Gross margin %) ÷ Monthly churn rate
Calculate your own ltv (customer lifetime value) instantly, free.
Open the calculator →