Customer Lifetime Value Calculator

Calculate LTV and LTV:CAC ratio

Calculate Customer Lifetime Value

This customer lifetime value calculator estimates how much revenue or gross profit one customer generates over their full relationship with your business.

Quick Answer

Customer lifetime value (LTV) is usually calculated as average monthly revenue per customer multiplied by average customer lifespan in months. If you include gross margin, you get a profit-adjusted LTV that is more useful for budgeting acquisition spend.

Use the LTV:CAC ratio to compare value created per customer against cost to acquire that customer. A ratio below 1:1 means acquisition is not recovered.

How to Use This Customer Lifetime Value Calculator

  1. Enter average monthly revenue per customer and average customer lifespan in months.
  2. Optionally add gross margin percent to estimate profit-adjusted LTV.
  3. Optionally add CAC to calculate the LTV:CAC ratio and review unit economics health.

Inputs and Outputs

Field Type What it changes
Avg Revenue per Customer (monthly) Required input Base monthly value used in both gross and margin-adjusted LTV.
Avg Customer Lifespan (months) Required input Multiplier for monthly value across the full customer lifecycle.
Gross Margin % Optional input Converts gross LTV to margin-adjusted (profit-proxy) LTV.
Customer Acquisition Cost (CAC) Optional input Enables LTV:CAC ratio output.
LTV, Gross LTV, LTV:CAC ratio Outputs Core metrics for customer economics and acquisition efficiency.

Understanding the LTV Formula

Simple Formula: LTV = ARPU × Customer Lifespan

With Margin: LTV = ARPU × Lifespan × Gross Margin

LTV:CAC Ratio Reference Ranges:

  • Below 1:1 — Losing money on each customer
  • 1:1 - 3:1 — Sustainable but room to improve
  • 3:1 - 5:1 — Healthy SaaS business
  • Above 5:1 — Often indicates efficient acquisition or conservative spend

Worked Examples

Example 1 (Gross LTV): ARPU = $50, lifespan = 24 months. Gross LTV = 50 × 24 = $1,200.

Example 2 (Margin-adjusted + CAC): ARPU = $80, lifespan = 18 months, margin = 65%, CAC = $300. Gross LTV = $1,440, margin-adjusted LTV = 1,440 × 0.65 = $936, and LTV:CAC = 936 / 300 = 3.1:1.

Edge case: If gross margin is very low (for example 20%), a business can show high gross LTV but weak margin-adjusted LTV. Use the margin field when comparing against CAC.

Common LTV Mistakes

  • Using trial users or one-time buyers in ARPU when the model is subscription-based.
  • Mixing monthly ARPU with yearly lifespan without converting units.
  • Comparing gross LTV against fully loaded CAC without applying margin.
  • Using one short period that includes seasonal spikes and treating it as a stable baseline.

FAQ: Customer Lifetime Value Calculator

What is a good LTV:CAC ratio?

Many teams use 3:1 as a practical target. Lower than 1:1 is generally unprofitable, while very high ratios can indicate underinvestment in growth.

What is the difference between LTV and CLV?

In most SaaS and ecommerce contexts, LTV and CLV are used interchangeably to mean customer lifetime value.

Should I use gross revenue or gross profit for LTV?

For unit economics decisions, gross profit is usually more informative. This tool supports both by allowing an optional margin input.

Can this calculator be used for non-subscription businesses?

Yes, if you can estimate average revenue per customer over a defined lifespan. Accuracy depends on how stable repeat purchase behavior is.

How often should I update LTV?

Most teams update monthly or quarterly, then compare trends by acquisition channel, plan type, or cohort.

Does this calculator include refunds or support costs?

No. It only applies the inputs you provide. If refunds or service costs are material, incorporate them into your margin assumptions.

What if I do not know customer lifespan yet?

Use a conservative estimate from observed churn and revise as more cohort data becomes available.

Is this financial advice?

No. This is an educational calculator for unit economics estimation and planning.

Privacy and Limits

  • All calculations run in your browser. No account required.
  • This tool does not store your inputs on a server.
  • Outputs are estimates and depend on your assumptions and data quality.

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