Calculate your Customer Lifetime Value in seconds. Understand how much each customer is worth, how long they stay, and whether your unit economics actually work.
Formula
LTV = (Monthly Revenue x Gross Margin) / Monthly Churn Rate
Reduce churn first. Even a 1% drop in monthly churn can increase LTV by 20% or more.
Increase ARPU with upsells. Add premium tiers, usage-based pricing, or add-ons to grow revenue per customer.
Target better customers. Customers who match your ICP churn less and expand more.
Improve onboarding. Most churn happens in the first 30 days. Nail the activation experience.
Aim for 3x LTV/CAC. The gold standard for SaaS. Below 3x, growth is constrained. Above 5x, you may be underinvesting.
Recalculate quarterly. LTV shifts as your product, pricing, and customer base evolve.
Did you know? A 1% improvement in retention can increase LTV by 5-25%, depending on your current churn rate. Retention is the single highest-leverage metric for SaaS businesses.
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Get StartedCustomer Lifetime Value is the total revenue you can expect from a single customer over the entire duration of their relationship with your business. For SaaS founders and indie hackers, LTV is one of the most important metrics to track because it tells you how much you can afford to spend acquiring customers while still remaining profitable.
The basic LTV formula divides your monthly gross profit per customer by your monthly churn rate. This gives you a simple, reliable estimate of how much value each customer brings over time. When combined with your Customer Acquisition Cost (CAC), the LTV/CAC ratio reveals whether your business model is sustainable. A ratio of 3x or higher is considered healthy for most SaaS businesses, meaning each customer generates three times what it costs to acquire them.
The most effective way to improve LTV is to reduce churn. Small improvements in retention compound dramatically over time. Better onboarding, proactive support, and regular feature delivery all contribute to keeping customers longer. Pricing optimization and expansion revenue through upsells are also powerful levers. Use this calculator regularly to track how your LTV evolves as you make changes to your product and go-to-market strategy.