Yusuf Bayrak
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    LTV Calculator

    LTV (Lifetime Value) is the present value of total revenue a customer produces over the length of the relationship. Target an LTV/CAC ratio of 3x or more.

    //Calculator
    // Customer Lifetime Value (LTV)
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    LTV = (ARPU × Gross Margin) / Monthly Churn
    //Guide

    What is LTV (Lifetime Value)?

    LTV is the present value of the total net revenue a customer generates over their relationship with the company. The most common formula is LTV = (ARPU × Gross Margin) / Churn — a single number that combines how long a customer stays with how profitably they contribute.

    LTV becomes most powerful when compared to CAC. LTV / CAC of 3x or higher signals healthy unit economics. Getting close to 1 means growth is unprofitable; above 5 usually means the business is under-investing in growth. CAC payback under 12 months is a critical threshold for cash-flow sustainability.

    The most effective ways to grow LTV are lowering churn, expanding ARPU via upsell and cross-sell and improving gross margin. When product, pricing and customer success share LTV as a KPI, growth becomes more sustainable.

    //Frequently Asked Questions

    How is LTV calculated?

    The most common formula: LTV = (Monthly ARPU × Gross Margin %) / Monthly Churn. It combines per-customer profitability and expected tenure into one figure.

    What is the ideal LTV / CAC ratio?

    3x or higher is healthy. 1x-2x means weak unit economics; above 5x usually means you could invest more aggressively in growth.

    Why use gross margin in LTV?

    Because real profit — not top-line revenue — is what matters. Gross margin after hosting, payment fees and support cost reflects LTV's true financial value.

    Fastest way to grow LTV?

    Reducing churn is usually the highest-leverage move: cutting monthly churn from 5% to 3% grows LTV by roughly 67%. Growing ARPU via upsell comes next.