Acquisition
Customer lifetime value calculator
Enter what an average account pays each month, your gross margin and your monthly churn. The calculator gives the gross profit a customer brings over their lifetime.
Customer lifetime value
$4,800
Gross profit over the customer's lifetime
- Average customer lifetime
- 50 months
- Lifetime revenue
- $6,000
How to read the result
This formula assumes churn stays constant and revenue per account does not change. Real customers expand and churn unevenly, so treat the result as an estimate and check it against what older cohorts have actually paid.
Small changes in churn move LTV a long way. Halving churn doubles it.
The formula
AcquisitionLTV = (average revenue per account a month × gross margin) ÷ monthly churn rate.
Frequently asked questions
Because revenue is not what you keep. LTV is compared with acquisition cost, so both should be in the same terms: money left after the cost of serving the customer.
The formula gives an implausibly large number. Cap the lifetime at a fixed horizon, such as five years, instead.
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