CLTV Calculator (Customer Lifetime Value)
Calculate Customer Lifetime Value using Simple, Traditional, and Discounted DCF models. Analyze ARPU, churn, retention, and margins.
| Period | Retention Prob. | Revenue | Gross Profit | Discount Factor | PV of Profit | Cumulative CLTV |
|---|
About
Mispricing Customer Lifetime Value leads to overspending on acquisition or underinvesting in retention. Both errors erode margin. This calculator implements three standard models: the Simple model multiplies average purchase value (APV) by frequency (f) and lifespan (T); the Traditional model divides gross-margin-weighted ARPU by churn rate (c); the Discounted model applies a net-present-value summation over N periods using a discount rate (d) and per-period retention probability. Results diverge significantly when retention is below 80%. The discounted model is the only one that accounts for the time value of money and is preferred for SaaS and subscription businesses with contract lengths exceeding 12 months.
Limitation: all three models assume stationary behavior. They do not capture cohort-level shifts in spending or seasonal churn spikes. For businesses with variable pricing tiers, use the weighted-average revenue per user. Pro tip: always cross-check your churn denominator. Monthly churn of 5% compounds to annual churn of roughly 46%, not 60%. Confusing the two will inflate your CLTV by a factor of two or more.
Formulas
Model 1 - Simple CLTV
Where APV = average purchase value, f = average purchase frequency (per period), and T = average customer lifespan in the same period unit.
Model 2 - Traditional CLTV
Where ARPU = average revenue per user per period, GM = gross margin as a decimal (0 - 1), and c = churn rate per period. Implied lifespan is 1c.
Model 3 - Discounted CLTV (DCF)
Where r = retention rate per period (1 − c), d = discount rate per period, and N = projection horizon in periods. This model converges as r < 1 and produces a present-value-adjusted figure that accounts for the time cost of capital.
Auxiliary: Churn ↔ Retention Conversion
Reference Data
| Industry / Segment | Avg. Monthly Churn | Implied Lifespan | Typical Gross Margin | CLTV Range |
|---|---|---|---|---|
| Enterprise SaaS | 0.5% | 200 months | 80% | $50,000 - $500,000 |
| SMB SaaS | 3 - 5% | 20 - 33 months | 75% | $1,000 - $10,000 |
| E-commerce (General) | 7 - 10% | 10 - 14 months | 30 - 50% | $100 - $1,500 |
| E-commerce (Luxury) | 4 - 6% | 17 - 25 months | 50 - 65% | $2,000 - $20,000 |
| Subscription Box | 8 - 12% | 8 - 12 months | 40 - 55% | $80 - $500 |
| Streaming Media | 3 - 5% | 20 - 33 months | 55 - 65% | $150 - $600 |
| Mobile Gaming | 15 - 25% | 4 - 7 months | 70 - 85% | $5 - $50 |
| Insurance | 1 - 2% | 50 - 100 months | 15 - 25% | $3,000 - $30,000 |
| Banking (Retail) | 0.8 - 1.5% | 67 - 125 months | 20 - 35% | $5,000 - $50,000 |
| Telecom | 1.5 - 3% | 33 - 67 months | 55 - 65% | $2,000 - $8,000 |
| Fitness / Gym | 4 - 7% | 14 - 25 months | 60 - 75% | $400 - $2,500 |
| Online Education | 5 - 8% | 12 - 20 months | 70 - 85% | $200 - $3,000 |
| Food Delivery | 10 - 15% | 7 - 10 months | 15 - 25% | $30 - $300 |
| Professional Services | 2 - 4% | 25 - 50 months | 50 - 70% | $5,000 - $100,000 |
| Automotive (Dealership) | 1 - 2% | 50 - 100 months | 10 - 20% | $10,000 - $80,000 |