Free Subscription LTV calculator with clear step-by-step results.
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.
Lifetime value
LTV = ARPU x gross margin / (net churn + monthly discount rate)
Net churn
Net churn = gross churn - net expansion rate
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.
Revenue arriving in five years is worth less than revenue this month. Without discounting, low-churn businesses show implausibly large lifetime values.