Customer Lifetime Value (LTV) Calculator
Calculate Customer Lifetime Value to understand how much revenue a customer generates over their relationship with your business.
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How to use this calculator
Simple LTV multiplies average revenue per year by lifespan. Margin-adjusted LTV applies gross margin to get profit contribution. Discounted LTV uses net present value to account for the time value of money. LTV:CAC ratio measures return on customer acquisition investment.
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Enter your average order value, purchase frequency, and how many years customers typically stay.
- 2
Add your gross margin percentage and customer acquisition cost (CAC) for profitability metrics.
- 3
Review the LTV:CAC ratio — above 3× is excellent, below 1× means you are losing money on each customer acquired.
Frequently asked questions
What is a good LTV:CAC ratio?
A ratio above 3× is considered excellent — you earn $3 in margin-adjusted lifetime value for every $1 spent acquiring a customer. 2–3× is good, 1–2× is acceptable, and below 1× means your customer acquisition is destroying value. SaaS companies often target 3–5× while scaling.
What is the difference between simple LTV and discounted LTV?
Simple LTV adds up future revenue without adjusting for time value of money. Discounted LTV (NPV) recognizes that a dollar earned 3 years from now is worth less than a dollar today. For long customer lifespans or high discount rates, discounted LTV gives a more conservative and accurate picture.
How can I increase customer LTV?
Increase average order value through upsells and cross-sells, boost purchase frequency with email campaigns and loyalty programs, extend customer lifespan by improving onboarding and customer success, and improve gross margins by optimizing COGS. Each lever compounds: a 10% improvement in all four can more than double LTV.
Customer Lifetime Value (LTV) Calculator
Why Customer Lifetime Value Is the Most Important Marketing Metric
Customer Lifetime Value (LTV or CLV) tells you the total profit a single customer will generate over their entire relationship with your business. It is the foundation of every growth decision: how much can you afford to spend acquiring a customer? Should you invest in retention or acquisition? Which customer segments deserve premium support? Without knowing LTV, your marketing budget is just guesswork. With it, you can set precise CAC targets, build profitable acquisition channels, and prioritize the products and segments that drive the most long-term value.
LTV:CAC Ratio — the North Star of Sustainable Growth
The LTV:CAC ratio divides margin-adjusted lifetime value by customer acquisition cost. It is the clearest single indicator of whether a business model is sustainable. A ratio below 1 means you are spending more to acquire customers than they will ever return — a fast path to cash burn. A ratio of 3× or higher with a payback period under 12 months is the sweet spot for scaling: you can confidently reinvest profits into paid acquisition, knowing each new customer will more than pay for itself within the year.
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Results are estimates for informational purposes only and do not constitute professional financial, medical, legal, or technical advice. Read full disclaimer →