CUSTOMER LIFETIME VALUE ASSUMPTIONS AND COHORT WORKSHEET
ShowMeYourSaaS — October 26, 2026
Guide: https://showmeyoursaas.com/articles/customer-lifetime-value/

DEFINE THE ECONOMIC MEASURE
Currency:
Account unit and customer segment:
Monthly revenue per account (not an annual invoice amount):
Direct delivery costs included:
Gross margin and allocation policy:
Acquisition cost definition and period:
Lifetime: entered assumption / constant monthly customer-churn model
Source, date, and uncertainty of every input:

FORMULAS — SIMPLE, UNDISCOUNTED, CONSTANT-REVENUE SCENARIOS
Revenue LTV = monthly revenue/account × assumed paid lifetime in months
Monthly gross profit = monthly revenue/account × gross margin as a fraction
Gross-profit LTV = monthly gross profit × assumed paid lifetime in months
Gross-profit LTV:CAC = gross-profit LTV / CAC
Simple CAC payback = CAC / monthly gross profit
CAC = 0: LTV:CAC is undefined. Do not report an infinite ratio.
Monthly gross profit = 0: this simple model has no finite CAC payback rate.

FICTIONAL ENTERED-LIFETIME EXAMPLE
Monthly revenue/account: $40
Direct monthly delivery costs/account: $10
Monthly gross profit: $30
Gross margin: 75%
Assumed paid lifetime: 24 months
CAC: $150
Revenue LTV: $40 × 24 = $960
Gross-profit LTV: $30 × 24 = $720
Gross-profit LTV:CAC: $720 / $150 = 4.8:1
Simple payback: $150 / $30 = 5 paid months

FICTIONAL CONSTANT-CHURN EXAMPLE
Assume a stable 4% monthly customer-churn probability and no expansion.
Implied lifetime: 1 / 0.04 = 25 months
Revenue LTV: $40 × 25 = $1,000
Gross-profit LTV: $30 × 25 = $750
Gross-profit LTV:CAC: $750 / $150 = 5:1
These are invented planning inputs, not a vendor benchmark or forecast.

MODEL LIMITS
The calculator bounds lifetime to 0.01–1,200 months to keep the exercise finite.
A zero observed churn rate does not establish an unlimited customer lifetime.
Use customer churn, not negative net revenue churn, in the simple shortcut.
Match monthly revenue with monthly churn; keep annual and monthly units distinct.
Constant revenue, constant margin, and no expansion are simplifying assumptions.
Fixed overhead, taxes, financing, discounting, and acquisition expense are not
subtracted from the displayed gross-profit LTV.
Annual prepayment and refunds change cash timing.

OBSERVED COHORT VALUE — KEEP UNFINISHED LIFETIMES VISIBLE
Original acquired accounts:
Completed observation horizon:
Revenue accumulated by that horizon:
Direct delivery costs accumulated by that horizon:
Observed revenue/original account:
Observed gross profit/original account:
Active accounts with unfinished lifetimes:
Use original acquired accounts as the denominator, including accounts that left.

FICTIONAL SIX-MONTH COHORT
10 original accounts; $1,600 revenue; $400 direct delivery costs.
Observed six-month revenue/account = $160.
Observed six-month gross profit/account = $120.
Value after month six is not established by these observations.

SENSITIVITY AND DECISION
What changes if lifetime is shorter, margin falls, or acquisition costs rise?
Which inputs are observed and which are assumptions?
Does a segment differ in delivery effort or renewal cadence?
Bounded next experiment, spending ceiling, owner, and review date: