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Customer Lifetime Value

Customer Lifetime Value is part of Toolspire and is ready as soon as this page loads. This is the steady-state sketch LTV = ARPU ÷ churn. It assumes churn stays constant and ignores margin, discounts and a cost to acquire the customer.

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What you can do here

Revenue, not margin

₹50 is what they pay, not what you keep after serving them.

Same period on both boxes

The formula does not convert a monthly churn into a yearly one.

Zero churn is refused

Infinite lifetime is not printed as a huge number.

The sequence

How to use the Customer Lifetime Value

  1. 1

    Pick a period and stick to it

    If churn is 5% a month, ARPU must be one month of revenue, and the ₹1,000 is a stock of monthly revenues.

  2. 2

    Use the churn page’s definition

    Opening-balance churn, not a blended rate that netted off new sales.

  3. 3

    Subtract acquisition cost yourself

    This page stops at the revenue stock. A ₹1,000 LTV and a ₹1,200 acquisition is a loss the page will not announce.

Worth knowing

  • Customer Lifetime Value on Toolspire: LTV = ARPU ÷ (churn ÷ 100).
  • ₹50 ÷ 0.05 = ₹1,000.
  • The period of the revenue and the period of the churn must match. Monthly ARPU needs a monthly churn percent.
  • A churn of 0 is rejected. A customer who never leaves has no finite value in this model.

A constant hazard, not a cohort

If every period 5% of the remaining customers leave, the expected number of periods is 1 ÷ 0.05 = 20. Twenty periods of ₹50 is ₹1,000. That is the whole model. Real cohorts churn faster in month one and slower later. Discounting those future rupees would shrink the ₹1,000. Neither adjustment is in this figure.

FAQ

Questions about Customer Lifetime Value

Where does Customer Lifetime Value run?

Customer Lifetime Value runs in this tab on Toolspire. What you type or drop in is not sent to us and is not stored on a server.

What is LTV for ₹50 ARPU and 5% churn?

₹1,000. Expected periods are 20.

What if churn is yearly and revenue is monthly?

The number is nonsense. Put both on the same clock before you type.

Why is zero churn rejected?

The expected lifetime would be endless. The page refuses instead of printing infinity.

Does this include profit margin?

No. Multiply by your margin after you leave the page if you want a contribution LTV.

Keep going

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