How do I calculate LTV (Customer Lifetime Value)?

Use the formula(s) on this page. Keep inputs consistent by period and basis.

What are good benchmarks?

Benchmarks vary by model and stage. See Benchmarks on this page for ranges.

Inconsistent definitions/time windows; wrong basis (revenue vs gross profit).

Pitchkit

LTV (Customer Lifetime Value)

Expected gross profit from a customer over their lifetime.

Common approach

For subscriptions, approximate LTV with ARPU, gross margin, and churn.

Be consistent about gross vs net revenue and margin assumptions.

Benchmarks

SMB: 3–5× CAC; Mid-market: 4–7×; Enterprise: 6–10×. Balance with payback speed.

Worked example

ARPU $80, Gross margin 80%, Monthly churn 3% → LTV = (80×0.8)/0.03 ≈ $2,133.

Common pitfalls

Using revenue instead of gross profit; wrong churn input (logo vs revenue).

Mixing ARPA vs ARPU; ignoring contraction/expansion dynamics.

How to show in your deck

Financials slide with LTV/CAC and payback; add footnote on basis (gross margin).

Formulas

SaaS LTV (simple)

(ARPU x Gross margin) / Monthly churn rate

Use net revenue churn for a more conservative view if expansion is material.

FAQs

LTV:CAC ratioSee ChurnSee ARPUSee

LTV (Customer Lifetime Value)

Expected gross profit from a customer over their lifetime.

Common approach

For subscriptions, approximate LTV with ARPU, gross margin, and churn.

Be consistent about gross vs net revenue and margin assumptions.

Benchmarks

SMB: 3–5× CAC; Mid-market: 4–7×; Enterprise: 6–10×. Balance with payback speed.

Worked example

ARPU $80, Gross margin 80%, Monthly churn 3% → LTV = (80×0.8)/0.03 ≈ $2,133.

Common pitfalls

Using revenue instead of gross profit; wrong churn input (logo vs revenue).

Mixing ARPA vs ARPU; ignoring contraction/expansion dynamics.

How to show in your deck

Financials slide with LTV/CAC and payback; add footnote on basis (gross margin).

Formulas

SaaS LTV (simple)

(ARPU x Gross margin) / Monthly churn rate

Use net revenue churn for a more conservative view if expansion is material.

FAQs

LTV:CAC ratioSee ChurnSee ARPUSee

LTV (Customer Lifetime Value)

Expected gross profit from a customer over their lifetime.

Common approach

Benchmarks

Worked example

Common pitfalls

How to show in your deck

Formulas

FAQs

Related

LTV (Customer Lifetime Value)

Expected gross profit from a customer over their lifetime.

Common approach

Benchmarks

Worked example

Common pitfalls

How to show in your deck

Formulas

FAQs

Related

LTV (Customer Lifetime Value)

Expected gross profit from a customer over their lifetime.

Common approach

Benchmarks

Worked example

Common pitfalls

How to show in your deck

Formulas

FAQs

How do I calculate LTV?

What are good benchmarks?

Common pitfalls?

Related

LTV (Customer Lifetime Value)

Expected gross profit from a customer over their lifetime.

Common approach

Benchmarks

Worked example

Common pitfalls

How to show in your deck

Formulas

FAQs

How do I calculate LTV?

What are good benchmarks?

Common pitfalls?

Related