Customer lifetime value (LTV) calculator

Lifetime value is what a customer is worth over the whole relationship. A common method is monthly gross profit per customer divided by monthly churn.

The formula

LTV = ARPU a month × gross margin ÷ monthly churn

Worked example: £2,791 a customer

The example is a UK software company in one month: £50,000 of revenue excluding VAT, 400 customers and £180,000 in the bank.

£119.62 ARPU × 70% gross margin = £83.73 gross profit a month
£83.73 ÷ 3.0% monthly churn = £2,791

Try it with your numbers

Work out your LTV

It starts on the example. Replace any figure with your own; nothing you type leaves your browser.

Your business numbers

Start with any one figure. Each one you add works out more below. Your numbers are kept in this browser only.

What this calculation uses

MonthQuarterYear

Turnover (needed)

Everything you invoiced in the period.

Cost of sales

Costs that grow with each sale: materials, hosting, payment fees.

Customers at the start (needed)

New customers

Customers lost (needed)

Add more of your numbers

Open a group to fill it in. Everything you add shows up in the list below the calculator.

Sales and VAT

My turnover includes VAT

20%5%None

VAT you reclaim on costs

Input VAT on your purchases in the period.

Of which recurring

Subscriptions and contracts, excluding VAT.

Value of orders through your platform

Marketplaces only: what buyers paid in total.

Costs

Staff costs

Salaries, employer National Insurance, pensions, freelancers.

Sales and marketing

Ads, sales salaries and tools.

Other running costs

Rent, software, insurance, admin.

Depreciation and amortisation

From your accounts. 0 if you have none.

Interest paid

Corporation Tax

For the period, if you pay any.

Equipment and other capital spending

Things that last more than a year.

Customers and orders

Number of orders

Or invoices, for a service business.

Recurring revenue over one month

MRR at the start of the month

Upgrades

Extra MRR from existing customers.

Downgrades

MRR lost from customers who left

Growth

Revenue this month

Revenue last month

Revenue this quarter

Revenue last quarter

Revenue this year

Revenue last year

Cash

Cash in the bank

Cash received from customers

In the period, not what you invoiced.

Cash paid out for running costs

In the period, not counting equipment.

Balance sheet

Everything the company owns

Cash, equipment, money owed to you.

Everything it owes

Loans, bills, tax due.

Team

Hours your team works a week

Everyone added together.

Full-time hours a week

One investment or campaign

What you spent

On a campaign, a hire or a piece of kit.

What it brought back

Extra gross profit it produced.

Your LTV

£2,791

a customer

£119.62 ARPU × 70% gross margin = £83.73 gross profit a month
£83.73 ÷ 3.0% monthly churn = £2,791

Formula: ARPU a month × gross margin ÷ monthly churn.

Average customer lifetime: 33 months; 1 ÷ monthly churn

How to read your result

LTV is an estimate built on today's churn. If churn falls, LTV rises fast, which is why investors check how you measure churn.

Watch out for

Use gross profit, not revenue. LTV on revenue ignores what it costs to serve the customer.

Last checked 24 October 2026. Estimates only, not financial, tax or legal advice: check your accounts and documents, and take advice before you act. More terms in the startup glossary.