Subscription LTV

Free Subscription LTV calculator with clear step-by-step results.

About Subscription LTV

Values a subscriber as a perpetuity of gross profit decaying at net churn and discounted for the time value of money. Net expansion offsets churn, which is why a business with negative net churn has a mathematically unbounded lifetime value and must be capped by judgement rather than formula.

Formulas

Lifetime value

LTV = ARPU x gross margin / (net churn + monthly discount rate)

Net churn

Net churn = gross churn - net expansion rate

Worked example

With the default values below, Subscription LTV returns Discounted lifetime value of $822.86. Change any input above and every figure here is recalculated in your browser.

Inputs used

Average revenue per userminimum 0 $/month: 32 $/month
Gross marginaccepts 0–100 %: 78 %
Monthly churn rateaccepts 0.05–50 %: 3 %
Monthly net expansionaccepts 0–10 %: 0.8 %
Annual discount rateaccepts 0–40 %: 10 %
Customer acquisition costminimum 0 $: 280 $

Results

Discounted lifetime value: $822.86
LTV to CAC ratio: 2.94 x
Average customer lifetime: 45.5 months
Months to pay back acquisition cost: 11.2 months

Step by step

1Values used
2Lifetime value
3Net churn
4Discounted lifetime value= $822.86
5LTV to CAC ratio= 2.94 x
6Average customer lifetime= 45.5 months
7Months to pay back acquisition cost= 11.2 months

Assumptions and limits

The result is derived only from the 6 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation or tax into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

What LTV to CAC ratio should I aim for?

Three or above is the conventional benchmark for a healthy subscription business. Below one you lose money on every customer; far above three often means you are under-investing in growth.

Why include a discount rate?

Revenue arriving in five years is worth less than revenue this month. Without discounting, low-churn businesses show implausibly large lifetime values.