How to calculate customer lifetime value (LTV)
A simple margin-adjusted LTV is average revenue per customer per period times gross margin, divided by the churn rate for the same period.
Skip the maths and use the ltv calculator
The formula
LTV = ARPU × gross margin ÷ churn rate. Revenue LTV = ARPU ÷ churn rate.
Step by step
- Find ARPU for one period (often a month).
- Find gross margin as a fraction.
- Find churn for the same period.
- Apply the formula.
Worked example
ARPU 100 a month, 80% margin, 2% monthly churn
- 100 × 0.80 = 80 gross profit a month
- 80 ÷ 0.02 = 4,000
Margin-adjusted LTV is 4,000.
Common questions
Calculators for this
Cite this page
Free Calculator. (n.d.). How to calculate customer lifetime value (LTV). https://freecalculator.tech/guides/how-to-calculate-customer-lifetime-value
"How to calculate customer lifetime value (LTV)." Free Calculator, https://freecalculator.tech/guides/how-to-calculate-customer-lifetime-value.
How to calculate customer lifetime value (LTV) — Free Calculator, https://freecalculator.tech/guides/how-to-calculate-customer-lifetime-value