Customer Lifetime Value (LTV) Calculator 2026
This customer lifetime value calculator computes LTV, gross-margin-adjusted LTV, CAC payback in months and the LTV:CAC ratio that investors actually look at in 2026. Enter average revenue per user (ARPU), gross margin, monthly churn and customer acquisition cost (CAC); the tool returns simple LTV (ARPU/churn), gross-margin LTV ((ARPU × margin)/churn) and the LTV:CAC ratio. Example: an EUR 49 ARPU SaaS with 75% gross margin, 3% monthly churn and EUR 250 CAC has a simple LTV of EUR 1,633, a margin-adjusted LTV of EUR 1,225, an LTV:CAC of 4.9× and a CAC payback of 6.8 months — investor-grade. Last updated June 2026.
How to use this calculator
- 01Enter the average revenue per user (ARPU) per month.
- 02Enter your gross margin percentage.
- 03Enter the monthly churn rate.
- 04Enter the average customer acquisition cost (CAC).
- 05Read the LTV, LTV:CAC ratio and the payback in months.
- •Simple LTV = ARPU ÷ monthly churn.
- •Investor-grade LTV uses gross margin: (ARPU × margin) ÷ churn.
- •LTV:CAC ratio > 3× is healthy; > 5× may mean under-investing.
- •CAC payback under 12 months is the gold standard for SaaS.
- •Reducing churn by 1pp can lift LTV more than raising ARPU by 10%.
Frequently asked questions
What is a good LTV:CAC ratio?
3:1 is the investor benchmark for SaaS. Above 5:1 may mean you are under-investing in growth; below 1:1 you are losing money on every customer.
Should I use gross-margin LTV or simple LTV?
Investors and serious operators use gross-margin LTV ((ARPU × gross margin) ÷ churn). Simple LTV (ARPU/churn) overstates the value by ignoring delivery costs.
How is CAC payback calculated?
CAC payback (months) = CAC ÷ (ARPU × gross margin). It tells you how many months of margin-adjusted revenue you need to recover the acquisition cost.
What if churn is zero?
Mathematically LTV would be infinite. Use a maximum customer lifetime cap (e.g. 60 months) for the calculation, or use cohort-based LTV from your actual retention curves.
How can I improve LTV?
1) Reduce churn through onboarding and engagement; 2) raise ARPU through upsells and annual plans; 3) improve gross margin by automating delivery. Churn reduction has the largest impact.
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