Margin BenchProduct index / business

SaaS & retention

Simplified Customer Lifetime Value Calculator

Estimate contribution-based subscription LTV from monthly ARPU, gross margin, and a positive steady-state monthly customer churn rate.

Use this for a simplified steady-state subscription estimate when monthly economics are stable. Use a cohort cash-flow model when retention, expansion, or margins change materially over time.

Your inputs

Use consistent units and a matching period throughout. Enter decimals with a dot or comma, without thousands separators.

Monthly recurring ARPU on the same paying-customer population used for customer churn.

Share of revenue remaining after direct service costs; enter 80 for 80%, not 0.8.

Positive monthly logo churn for the same customer population. Zero churn gives no finite estimate in this model.

Your result

Result for the default inputs

Estimated contribution LTV (input currency per customer)

2,000.00

Calculations run in this browser. Inputs are not sent to a server or added to a share link.

What the result means

The estimate uses monthly contribution times an implied lifetime of 1 / monthly churn as a fraction. It assumes steady-state economics and is not a measured lifetime outcome. Zero churn cannot justify an infinite or guaranteed LTV.

The formula

(Monthly ARPU * gross margin percentage / 100) / (monthly customer churn percentage / 100)

Results are displayed to at most two decimal places. Calculations use the unrounded inputs.

A worked example

Put the formula to work

Monthly revenue per paying customer (currency per customer per month)
100
Gross margin percentage (%)
80
Monthly customer churn (% per month)
4

Estimated contribution LTV (input currency per customer): 2,000.00

Monthly ARPU of 100 at 80% gross margin gives 80 monthly contribution. At constant 4% monthly churn, the implied 25-month lifetime yields an estimated LTV of 2,000.

How to use this calculator

  1. Align monthly ARPU and customer churn to the same paying-customer population.
  2. Multiply ARPU by the gross-margin fraction to estimate monthly contribution.
  3. Divide by a positive monthly churn fraction.
  4. Stress-test the estimate with alternative churn and margin assumptions.
  5. Use cohort cash flows instead when customer behavior is not steady-state.

Why this number matters

A contribution-based LTV estimate connects retention and service economics to acquisition affordability while making the simplifying assumptions visible.

Input definitions

Monthly revenue per paying customer (currency per customer per month)
Monthly recurring ARPU on the same paying-customer population used for customer churn.
Gross margin percentage (%)
Share of revenue remaining after direct service costs; enter 80 for 80%, not 0.8.
Monthly customer churn (% per month)
Positive monthly logo churn for the same customer population. Zero churn gives no finite estimate in this model.

Assumptions and limitations

  • Assumes constant independent churn, ARPU, and gross margin over an indefinitely modeled lifetime.
  • Excludes expansion, reactivation, changing cohort behavior, discounting, and the time value of money.
  • Not net lifetime profit: acquisition costs and fixed overhead are not subtracted.
  • Near-zero churn produces highly sensitive estimates; short histories rarely justify precision.

Methodology

The default result and worked example use the same calculation functions as the interactive tool. The formula cannot verify the quality or scope of your source data.

Read our calculation methodology

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