MRRTrackWhat is a customer worth?
Estimate customer lifetime value from monthly revenue, gross margin and churn.
$1,307
After gross margin, before acquisition cost.
- LTV / CAC
- 6.5×
- CAC payback
- 5.1 months
- Estimated lifetime
- 33.3 months
Zero churn: lifetime cannot be estimated. Zero CAC: ratio is undefined.
The formula and its limits
LTV = average monthly revenue per customer × gross margin ÷ monthly customer churn. This model assumes stable churn and margins, with no expansion or discounting. It provides a rough estimate for a subscription business. For operating decisions, also compare cohorts and CAC payback.
Learn more about customer lifetime value with Stripe ↗Useful questions
Which churn should I use?
Use the percentage of customers lost in one month, with the same scope as average revenue. Do not mix annual churn, revenue churn and customer churn.
Why is there no result at zero churn?
Division by zero cannot estimate a customer lifetime. A short period without cancellations does not prove infinite retention.
Is this loan-to-value?
No. Here LTV means customer lifetime value. The loan-to-value ratio uses a different formula.