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Founder Customer Lifetime Value Estimator

The Founder Customer Lifetime Value Estimator calculates a simplified gross-profit LTV from average monthly revenue per customer, gross margin, and monthly customer churn. It converts churn into an estimated customer lifetime and then estimates the gross profit expected across that lifetime.

This model is useful for early unit-economics checks and for comparing LTV with CAC. It assumes a stable churn rate, stable customer revenue, and stable gross margin. It does not discount future cash flows or model cohorts, expansion, contraction, or changing retention over time.

Customer economics inputs

USD
%
%
USD
Result
—
Estimated gross-profit customer LTV
Estimated customer lifetime—
LTV to CAC ratio—
Monthly gross profit per customer—

1. Enter monthly revenue per customer
Use recurring revenue averaged across active customers for one month.

2. Enter gross margin
Use revenue less direct cost of service, expressed as a percentage of revenue.

3. Enter monthly customer churn
Use the share of opening customers lost in a typical month.

4. Enter CAC
Add acquisition cost to compare customer value with acquisition spending.

5. Review LTV and ratio
The main result shows estimated gross-profit LTV and the details show lifetime and LTV-to-CAC ratio.

Estimated customer lifetime in months = 1 ÷ Monthly churn rate. Gross-profit LTV = Monthly revenue per customer × Gross margin × Estimated lifetime.

What the result means

The result estimates gross profit generated by an average customer over an expected lifetime under a constant-churn model.

The reciprocal-churn method is a simplification and can be unreliable when churn is volatile, very low, or strongly cohort-dependent.

Given: $120 monthly revenue per customer, 78% gross margin, 3.5% monthly churn, and $500 CAC.

Calculation: Estimated lifetime = 1 ÷ 0.035 = 28.57 months. Monthly gross profit = $120 × 0.78 = $93.60. LTV = $93.60 × 28.57 = $2,674.29.

Result: Estimated gross-profit LTV is $2,674.29, or about 5.35 times CAC.

Why is churn entered as a monthly percentage?

The lifetime formula uses the churn rate for the same monthly period as revenue. Quarterly or annual churn must be converted carefully before use.

Can LTV be calculated when churn is zero?

A zero churn rate makes the reciprocal lifetime mathematically unbounded. In practice, use observed cohort data or a conservative long-term retention assumption.

Should gross margin include sales and marketing cost?

No. Gross margin generally subtracts direct service or product delivery costs. CAC is entered separately.

What does a high LTV-to-CAC ratio mean?

It suggests expected customer gross profit is large relative to acquisition cost. It can also indicate underinvestment in growth or overly optimistic churn assumptions.

How is this different from discounted cash flow LTV?

This estimator does not discount future gross profit or model time-varying behavior. A discounted cohort model is more detailed and often more appropriate for mature data sets.