Subscription LTV Calculator

Discounted, because the revenue arrives slowly.

Discounted, because the revenue arrives slowly. Discounting matters more at low churn, because the revenue arrives further into the future.

Written and maintained by Mohit PatelLast checked August 4, 2026How we build these

Currency

Monthly revenue per subscriber

Contribution margin

Monthly churn

Annual discount rate

Cost to acquire

Subscriber lifetime value

$302.24

$359.60 undiscounted

Monthly contribution$17.98

Undiscounted LTV$359.60

Discounted LTV$302.24

LTV to CAC1.68:1

Discounting matters more at low churn, because the revenue arrives further away. At 5% churn the difference is $57.36; at half that churn it would be considerably larger.

How the Subscription LTV Calculator works

Discounting matters more at low churn, because the revenue arrives further into the future. A subscription with 2% monthly churn has an undiscounted lifetime value nearly double its discounted one, and only one of those figures should inform an acquisition decision.

Also known as: SaaS LTV calculator · subscriber lifetime value · ARPU divided by churn

Written out

Subscription lifetime value is monthly contribution divided by monthly churn rate: LTV = (ARPU × gross margin) ÷ churn.

Using contribution rather than revenue is essential, since serving a subscriber has a cost and the revenue version overstates what is available to fund acquisition.

The formula assumes constant churn, which is the assumption that makes it optimistic.

Running the numbers

$29 of ARPU at a 75% gross margin is $21.75 of monthly contribution. Divided by 4% churn: $543.75 of lifetime value.

Against a $58 CAC that is a ratio of 9.4, well above the conventional 3 target, suggesting the business could profitably spend considerably more to acquire.

The revenue version, $29 ÷ 0.04 = $725, would suggest a ratio of 12.5 and an affordable CAC a third higher than the business can actually support.

That difference is the cost of serving the subscriber, and businesses using revenue LTV systematically overpay for growth.

What gets missed

Front-loaded churn breaks the constant-rate assumption. A business losing 12% in month one and 3% thereafter has a real lifetime value well below what the blended 4% produces.

The formula also has no discounting, so contribution arriving in month 24 counts the same as month one. At any reasonable discount rate the present value is materially lower.

What to do next

Calculate it from cohort data where possible, actual cumulative contribution per cohort over time, rather than from the reciprocal formula. The two frequently differ by 30% or more.

Then apply a horizon cap. A twelve or twenty-four month lifetime value is verifiable and fundable; an infinite-horizon figure justifies acquisition spend the business cannot recover.

Why a 9.4 ratio is a signal rather than a success

A ratio that far above the conventional target usually means the business is underinvesting in growth. It could raise CAC to $180 and still hold a 3:1 ratio, acquiring far more subscribers.

The constraint is rarely the ratio. It is the payback period and the cash to fund it: at $58 CAC and $21.75 of monthly contribution, payback is 2.7 months and the business can fund aggressive growth. At $180 it would be 8.3 months and the funding requirement triples.

That is the calculation worth running when the ratio looks high: not whether more spending is justified, which it plainly is, but whether it can be financed at the speed the payback period implies.

Segmenting by acquisition channel usually reveals a wide spread, and the cheapest channel frequently produces the shortest-lived subscribers. Judging channels on CAC alone therefore optimises for the wrong thing.

Calculating channel-level LTV to CAC rather than blended is what makes the acquisition mix decision defensible.

Applying a discount rate to distant contribution makes the figure defensible for planning, since money arriving in month 25 is worth materially less than money arriving now.

At a 10% annual rate the discounted lifetime value on this example is roughly 15% below the undiscounted one.

Recalculating it quarterly rather than annually keeps the acquisition budget connected to reality, since both churn and margin drift and the affordable CAC moves with them.

Comparing the formula result against actual cumulative contribution from a mature cohort is the check that reveals how optimistic the constant-churn assumption has been.

Where to go next

The Subscription LTV question rarely arrives on its own. These are the ones that usually come with it:

Churn to LTV Impact Calculator — The relationship is hyperbolic, not linear.
Subscription Payback Period Calculator — With churn, and the cash a cohort ties up.
Customer Lifetime Value Calculator — Margin-based and discounted, not revenue.
Etsy Fee Calculator — Every Etsy fee on one sale, itemised.

Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price, check the platform's current fee schedule before you price a product against it. This is not tax or business advice.

Frequently asked questions

How is subscription LTV calculated?

Monthly contribution divided by monthly churn gives the simple version. Adding a discount rate to the denominator gives the present value, which is the figure to compare against acquisition cost.

Why does discounting matter more at low churn?

Because low churn means a longer lifetime, and money further away is worth less today. At 10% monthly churn the effect is small; at 2% it is substantial.

Should LTV use revenue or contribution?

Contribution. Serving a subscriber has a real cost, and comparing revenue-based LTV against a fully loaded acquisition cost overstates the ratio.

What discount rate should I use?

Your cost of capital, or the return you could get elsewhere. Ten to fifteen percent annually is common for a growing business; venture-backed companies often use more.