Customer Lifetime Value Calculator
Calculate how much revenue each customer generates over their lifetime. Optimize acquisition spending with LTV:CAC ratio analysis.
Customer LTV Calculator
Customer Acquisition Cost (for LTV:CAC ratio)
Customer LTV
$1,200
Lifetime value per customer
LTV:CAC Ratio
6.0:1
Healthy
CAC Payback
6.0 months
Good
Avg Lifespan
3.0 years
36 months
Cumulative Customer Value Over Time
Value Breakdown
Monthly Value
$33
Annual Value
$400
Lifetime Value
$1,200
Industry Benchmarks
LTV:CAC Ratio
- Excellent5:1 or higher
- Good3:1 to 5:1
- Acceptable2:1 to 3:1
- ConcerningBelow 2:1
CAC Payback Period
- Excellent< 6 months
- Good6-12 months
- Acceptable12-18 months
- Concerning> 18 months
How to Use This Calculator
Two modes for different business models.
Simple Mode
Best for e-commerce, retail, and non-subscription businesses.
- Average purchase value
- Purchase frequency per year
- Customer lifespan in years
Detailed Mode (SaaS)
Best for subscription, SaaS, and recurring revenue businesses.
- Monthly recurring revenue (ARPU)
- Gross margin percentage
- Monthly churn rate
- Discount rate for DCF
LTV Calculation Methods
Different formulas for different business models.
Simple LTV
Best for businesses with variable purchase patterns. Multiply average order value by purchase frequency and customer lifespan.
SaaS LTV
For subscription businesses. Monthly gross profit divided by monthly churn rate gives expected lifetime value.
DCF LTV
Most accurate method. Discounts future cash flows for time value of money and adjusts for declining retention probability.
Frequently Asked Questions
Common questions about customer lifetime value.
Why is LTV important?
LTV tells you how much you can afford to spend acquiring customers profitably. It also helps identify your most valuable customer segments, prioritize retention efforts, and forecast long-term revenue.
How do I increase LTV?
Increase LTV by: reducing churn (extend lifespan), increasing average revenue per user (upsells, cross-sells, price increases), improving gross margins (reduce COGS), and increasing purchase frequency for non-subscription businesses.
What if my LTV:CAC is too high?
A very high LTV:CAC ratio (above 5:1) may indicate under-investment in growth. You might be leaving market share on the table. Consider increasing marketing spend or expanding into new channels while maintaining a healthy ratio.
Should I calculate LTV by segment?
Yes! Average LTV hides important variations. Calculate LTV by acquisition channel, customer persona, product line, and geography. You'll often find some segments are 3-5x more valuable than others.
How often should I recalculate LTV?
Recalculate LTV monthly or quarterly as you get new data. Pay special attention after pricing changes, product launches, or major marketing campaigns. Compare cohorts to see if LTV is improving over time.
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