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Customer lifetime value & LTV:CAC

What LTV and LTV:CAC ratio follow from your customer economics?

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Quick answer

What does the Customer lifetime value & LTV:CAC calculate?

What LTV and LTV:CAC ratio follow from your customer economics? This calculator uses monthly revenue per customer, gross margin, other monthly service cost, expected customer lifetime, and customer acquisition cost to estimate customer unit economics immediately in your browser.

With the values currently entered, the result is $2,340.00 — estimated contribution lifetime value. It also shows ltv:cac ratio, monthly contribution, net value after acquisition, and acquisition payback.

How to use the Customer lifetime value & LTV:CAC

Replace the example values with your own numbers.
Review the result and supporting figures as they update automatically.
Check the formula and assumptions before using the estimate for a decision.

Inputs used

Monthly revenue per customer
Gross margin — entered in %
Other monthly service cost
Expected customer lifetime — entered in months
Customer acquisition cost

Customer lifetime value & LTV:CAC formula

Contribution LTV = (monthly revenue × gross margin − monthly service cost) × customer lifetime

Assumptions

Revenue, gross margin, service cost, and retention stay constant across the entered lifetime.
The result excludes discounting, expansion, contraction, shared overhead, and cohort variation.

Practical guide

Customer lifetime value & LTV:CAC example and edge cases

What LTV and LTV:CAC ratio follow from your customer economics? Let's use a concrete example, then look at the assumptions that can move the answer.

Example: A practical customer lifetime value & ltv:cac scenario

For this example, use monthly revenue per customer of 150, gross margin of 75 %, other monthly service cost of 15, expected customer lifetime of 24 months, and customer acquisition cost of 600. These are starting values, so replace them with numbers that match your situation.

Monthly revenue per customer: 150
Gross margin: 75 %
Other monthly service cost: 15
Expected customer lifetime: 24 months
Customer acquisition cost: 600

Calculated result$2,340.00estimated contribution lifetime value

Start with estimated contribution lifetime value. Then check ltv:cac ratio, monthly contribution, net value after acquisition, and acquisition payback to understand what sits behind the main result.

Example results use the default display profile. The calculator above follows your selected country and units.

How to read the result

Read the main result first. The supporting figures for ltv:cac ratio, monthly contribution, net value after acquisition, and acquisition payback explain how the estimate is built.
The method is Contribution LTV = (monthly revenue × gross margin − monthly service cost) × customer lifetime. Keep the units consistent and use values from the same time period.

Edge cases worth checking

When monthly revenue per customer is unusual

Revenue, gross margin, service cost, and retention stay constant across the entered lifetime. Double-check this input before relying on the result.

When customer acquisition cost is uncertain

The result excludes discounting, expansion, contraction, shared overhead, and cohort variation. Run a lower and higher value to see a useful range.

What changes the result most

Monthly revenue per customer

Use a current amount for monthly revenue per customer. Include fees or recurring costs that belong in the same figure.

Gross margin

Test a lower and higher gross margin. A small percentage change can move the final result more than expected.

Other monthly service cost

Use a current amount for other monthly service cost. Include fees or recurring costs that belong in the same figure.

Try a different scenario

Small changes show whether the answer is stable or sensitive.

Monthly revenue per customer: 10% lower

135

$2,070.00estimated contribution lifetime value

Monthly revenue per customer: 10% higher

165

$2,610.00estimated contribution lifetime value

Gross margin: 10% higher

83 %

$2,628.00estimated contribution lifetime value

Common mistakes

Check monthly revenue per customer

Revenue, gross margin, service cost, and retention stay constant across the entered lifetime. Make sure this matches the number you enter.

Keep customer acquisition cost consistent

The result excludes discounting, expansion, contraction, shared overhead, and cohort variation. Use the same units and time period throughout the calculation.

Do not rely on one customer lifetime value & ltv:cac scenario

Run a cautious case and an optimistic case. The range is often more useful than one exact-looking number.

Use this result well

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