Subscriber Lifetime Calculator

Understanding the subscriber lifetime calculator — concept and principle

For subscription businesses, monthly churn (the share of customers who cancel each month) determines how long an average customer stays and how much revenue they bring before leaving. This calculator turns a churn rate into an expected customer lifetime in months and multiplies it by monthly revenue per customer to estimate lifetime revenue. It works with any currency; the default example uses US dollars.

How it is calculated

Let c be monthly churn in percent and m the monthly revenue per customer.

• Average lifetime (months) = 100 ÷ c, which is 1 ÷ churn rate as a decimal
• Lifetime revenue = m × 100 ÷ c

The principle

If a constant share c of customers leaves every month, each customer faces the same chance of cancelling each month. The number of months until cancellation then follows a geometric distribution, whose mean is 1 ÷ c. Intuitively, with 3% churn, about 3 customers in 100 leave each month, so a typical customer's "turn" to leave comes after about 100 ÷ 3 ≈ 33 months on average. Lifetime revenue simply multiplies that expected duration by the monthly amount each customer pays.

Worked example

1. Inputs: monthly churn 3%, monthly revenue per customer $40.
2. Average lifetime = 100 ÷ 3 = 33.33… ≈ 33.3 months.
3. Lifetime revenue = 40 × 33.33… = $1,333.33.
4. For context, after 12 months about 0.97¹² ≈ 69% of a starting group is still subscribed.

How to read the result

Lifetime is very sensitive to churn: halving churn from 3% to 1.5% doubles the average lifetime to about 66.7 months. Lifetime revenue is a revenue figure, not profit; multiply it by your gross margin to get gross-margin lifetime value, and compare that with your customer acquisition cost. Many businesses aim for lifetime value comfortably above acquisition cost, but the right ratio depends on cash needs and payback time.

Common mistakes

• Entering annual churn into a monthly field, or the other way round.
• Treating lifetime revenue as lifetime value without applying gross margin.
• Assuming churn is constant when new customers usually churn faster than long-time ones.
• Ignoring discounting; money received in year three is worth less than money today.

Frequently asked questions

How do I calculate monthly churn?

Divide the customers lost during the month by the customers at the start of the month, then multiply by 100.

How does this relate to customer lifetime value (CLV)?

A simple CLV is monthly revenue × gross margin ÷ churn. This calculator gives the revenue part before margin.

Can I convert annual churn to monthly?

Use monthly churn = 1 − (1 − annual churn)^(1/12). Simply dividing annual churn by 12 is only a rough approximation.

Sources: Sunil Gupta and Donald R. Lehmann, "Customers as Assets", Journal of Interactive Marketing (2003) · Paul W. Farris et al., Marketing Metrics: The Definitive Guide to Measuring Marketing Performance (Pearson)