What is a healthy LTV:CAC ratio?

A ratio around 3:1 is a common healthy benchmark — three dollars of lifetime value for every dollar of acquisition cost. Below 1:1 you lose money on each member; far above 3:1 can mean you are under-investing in growth.

How do I estimate member lifetime from churn?

Average member lifetime in months is roughly 1 divided by your monthly churn rate. A 5% monthly churn implies about a 20-month average lifetime.

Should LTV use revenue or margin?

Use margin-adjusted revenue. Lifetime value should reflect the profit a member generates, not gross billings, so multiply revenue per member by your gross margin.

Free calculator

Membership LTV Calculator

Estimate average member lifetime, lifetime gross profit, and whether your acquisition spend pays back from ARPM, churn, margin, and CAC.

Your inputs

Average Monthly Revenue per Member

Monthly Churn Rate

Percentage of members who cancel each month

Gross Margin

Percentage of revenue left after the direct cost of delivering the service

Customer Acquisition Cost (CAC)

Your results

Average Member Lifetime

25 months

Lifetime Gross Profit (LTV)

$2,421

LTV:CAC Ratio

13.8:1

CAC Payback

2 months

Lifetime revenue (estimate): $3,725

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A copy of your inputs and numbers, so you can compare scenarios later.

How this is calculated

Membership economics depend on how long members stay and how much margin each month contributes. This is a simplified LTV model for planning.

Average lifetime (months) = 1 ÷ monthly churn rate. At 4% monthly churn, average lifetime ≈ 25 months.
Lifetime revenue = average monthly revenue per member × average lifetime months.
Lifetime gross profit (LTV) = lifetime revenue × gross margin %. Use the same margin definition you track in your P&L.
LTV:CAC ratio = lifetime gross profit ÷ customer acquisition cost. Many operators target 3:1 or higher (estimate); below 2:1 warrants scrutiny.
CAC payback months = CAC ÷ monthly gross profit per member. How long until one member's margin repays acquisition cost.

Worked example

At $149 ARPM, 4% monthly churn (~25 month lifetime), 65% margin, and $175 CAC: LTV ≈ $2,420 gross profit and LTV:CAC ≈ 13.8:1 (estimate).

All outputs are planning estimates, not guarantees. Consult the brand FDD and your advisors for decisions.

Lifetime value is what a member is worth to you over the whole time they stay, net of the cost to serve them. Compare it to what you pay to acquire a member (CAC) and you have the LTV:CAC ratio — the clearest signal of whether your growth spend is building value or burning it.

This calculator derives average member lifetime from your churn rate, then multiplies by margin-adjusted revenue to estimate LTV and the ratio that tells you how aggressively you can afford to market.

The formula

Average lifetime (months) = 1 ÷ monthly churn. LTV = ARPM × gross margin × average lifetime. LTV:CAC = LTV ÷ customer acquisition cost.

Related guide: Customer acquisition cost and LTV

Frequently asked questions

What is a healthy LTV:CAC ratio?: A ratio around 3:1 is a common healthy benchmark — three dollars of lifetime value for every dollar of acquisition cost. Below 1:1 you lose money on each member; far above 3:1 can mean you are under-investing in growth.
How do I estimate member lifetime from churn?: Average member lifetime in months is roughly 1 divided by your monthly churn rate. A 5% monthly churn implies about a 20-month average lifetime.
Should LTV use revenue or margin?: Use margin-adjusted revenue. Lifetime value should reflect the profit a member generates, not gross billings, so multiply revenue per member by your gross margin.