B2B ROI Calculator

LTV & LTV:CAC Ratio Calculator

Gross-margin LTV, customer lifetime and the LTV:CAC ratio with a health read. Benchmarks pre-filled, transparent formula, exportable report — free, no signup to calculate.

How is this calculated?
  • avg lifetime (months) = 1 / monthly churn%
  • LTV (gross-margin) = ARPA × gross margin% / monthly churn%
  • LTV (revenue) = ARPA / monthly churn%
  • LTV : CAC = LTV (gross-margin) / CAC
  • CAC payback = CAC / (ARPA × gross margin%) (months)
  • health band: ≈3:1 healthy · <1:1 loss-making · >5:1 possibly under-investing

LTV uses a constant monthly churn and constant ARPA — it does not model expansion revenue, cohort decay or a discount rate. It is the standard "1 / churn" lifetime approximation; treat it as a planning figure, not a DCF.

The margin-adjusted LTV (ARPA × margin ÷ churn) is the figure used for the LTV:CAC ratio, because CAC is a real cash cost and should be compared against gross-margin dollars, not gross revenue.

Full methodology & benchmark sources →

Example with demo defaults — adjust to your numbers

LTV (gross-margin) $6,400
LTV : CAC ratio 3.2:1
Avg customer lifetime 40 mo
LTV (revenue, no margin) $8,000
CAC payback 13 mo

Frequently asked questions

How is customer lifetime value (LTV) calculated?

Average customer lifetime is 1 ÷ your monthly churn rate. The headline LTV is gross-margin based: ARPA (monthly revenue per account) × gross margin% × lifetime, i.e. ARPA × margin ÷ monthly churn. We also show the simpler revenue LTV (ARPA ÷ churn) without margin, which is always higher. The exact formula is shown under “How is this calculated?”.

Should LTV use revenue or gross margin?

For the LTV:CAC ratio, use gross-margin LTV. CAC is real cash you spend to win a customer, so it should be compared against the gross-margin dollars that customer actually generates, not their gross revenue. The revenue version (ARPA ÷ churn) is fine as a top-line figure but flatters the ratio, so this calculator uses the margin-adjusted LTV for LTV:CAC by default.

What is a good LTV:CAC ratio?

A ratio around 3:1 is the widely cited healthy target — each customer returns about three times their acquisition cost over their lifetime. Below 1:1 you lose money on every customer acquired. Much above 5:1 can be a sign you are under-investing in sales and marketing and leaving growth on the table. Treat these as direction, not hard rules: the right ratio depends on your payback period and margins.

How is this different from the CAC and churn calculators?

The CAC calculator works out what you spend to acquire a customer; the churn calculator works out how fast customers leave. This calculator combines both with your revenue and margin to express value per customer and the LTV:CAC ratio. Calculate CAC and churn first, then bring those figures here.

Where do the default values come from?

The pre-filled numbers are demonstration defaults that produce a realistic example — they are not claimed industry averages. Replace them with your own figures for an accurate result. Where a field is labelled as an assumption, adjust it to match your business; the methodology page lists every default and its status.

Is my data stored anywhere?

No. Every calculation runs entirely in your browser. Nothing you type is sent to a server — there is no account and no copy of your numbers. If you download the PDF report, only the email you enter on the report form is stored, so we can follow up; your inputs stay on your device.