Customer lifetime value (LTV)
A straightforward LTV = monthly revenue × average lifetime in months. Pair this with your CAC on landing pages to justify spend—embed a version that matches your funnel with Calclet.
Example scenario
A product-led growth workspace vendor prices typical teams near seventy-nine dollars of recognized monthly subscription revenue per account after platform fees but before variable COGS—blending seat expansion with occasional downgrades the RevOps team smooths into ARPU. Churn and reactivation analytics imply roughly twenty-four months of active life before involuntary cancels, consolidation into enterprise parent deals, or deliberate offboarding cap the window. Multiplying ARPU by modeled lifetime months yields on the order of one thousand eight hundred ninety-six dollars of undiscounted gross lifetime revenue per average customer before contribution margin, financing costs, or support load factor into CLV-to-CAC guardrails leadership tracks.
Customer lifetime value (LTV)
Total revenue expected from one customer
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How to estimate simple customer LTV from MRR and lifetime months
- Derive average monthly revenue per customer from finance-recognized subscription revenue divided by active paying accounts—net coupons and bad debt the way your board pack reports ARPU.
- Set average customer lifetime using cohort survival analytics or one divided by gross churn when definitions align—avoid mixing annual contract customers with month-to-month SMB lifetimes without segmentation.
- Multiply ARPU by lifetime months to populate estimated customer LTV—treat the product as undiscounted gross revenue before variable cost allocation.
- Compare printed LTV against CAC and payback outputs from dedicated calculators—this row does not net margin or present-value discounting automatically.
How growth teams bench simple LTV against payback heuristics
- LTV-to-CAC ratio folklore
- Venture-facing SaaS operators often cite three-to-one or better as directional health—real economics still layer gross margin, payback months, and capital efficiency outside headline multiples
- Blended ARPU stability
- Promotional pricing, annual prepay recognition, and expansion seats swing ARPU quarter to quarter—model trailing twelve realized revenue per logo when possible
- Lifetime definition sensitivity
- Inverse-churn thinking maps average lifetime to gross churn but ignores expansion—pair this simple LTV with net revenue retention for dollar-based health checks
Best use cases
- Forecasting and scenario planning
- Client education and pre-qualification
- Budget and performance decision support
Frequently asked questions
Is this LTV gross revenue or contribution margin?
Gross revenue before COGS, support, and payment costs—divide by contribution margin outside this tool when investors ask for margin-adjusted CLV.
How should annual prepay customers map into monthly ARPU inputs?
Convert annual contract value to monthly equivalents consistent with revenue recognition or cash reality depending on which lens leadership uses for CAC payback.
Can I replace lifetime months with one divided by monthly gross churn?
Only when churn rate stays stable and single-product—expansion-heavy accounts violate constant-churn math so prefer cohort survival tables when NRR exceeds one hundred percent.
Why not discount future MRR to present value?
Simplicity for landing-page scenarios—apply discount rates and WACC in finance-grade models when comparing long-dated enterprise contracts.
Glossary
Scenario modeling
Testing multiple assumptions to estimate possible outcomes before execution.
Commercial intent
User behavior indicating readiness to buy, subscribe, or request a quote.
Related calculators
Category: SaaS & subscription customer economicsTopics: Customer lifetime value, Average MRR per account, Customer lifetime months
Last reviewed: 2026-05-07
Reviewed by: Calclet Growth Team