Customer Lifetime Value Calculator
Calculate how much a customer is worth to your business over their lifetime and optimize your acquisition costs.
Business Metrics
LTV Results
Profit LTV
$0
Revenue LTV: $0
LTV:CAC Ratio
0.00:1
Unsustainable. You lose money on each customer.
Free Customer Lifetime Value (LTV) Calculator
Understanding your Customer Lifetime Value (CLV/LTV) is crucial for sustainable business growth. This calculator helps you determine how much revenue and profit a typical customer generates over their entire relationship with your brand, enabling you to make smarter decisions about marketing spend.
Why Calculate LTV?
- Optimize Acquisition - Knowing your LTV tells you exactly how much you can afford to spend to acquire a new customer (CAC).
- Focus on Retention - It highlights the financial impact of keeping customers longer versus constantly finding new ones.
- Predictive Revenue - Helps forecast long-term cash flow based on current customer acquisition rates.
The LTV:CAC Ratio
The LTV to CAC ratio is one of the most important metrics for SaaS and e-commerce companies. It compares the lifetime value of a customer to the cost of acquiring them. A benchmark ratio of 3:1 means you make $3 in gross profit for every $1 spent on marketing and sales. A ratio lower than 3:1 indicates poor profitability, while a ratio of 5:1 or higher might mean you are under-investing in growth.
Frequently Asked Questions
What is Customer Lifetime Value (LTV)?
Customer Lifetime Value (LTV or CLV) is the total revenue a business can reasonably expect from a single customer account throughout the business relationship.
How do you calculate LTV?
A common way to calculate LTV is: Average Order Value × Purchase Frequency × Customer Lifespan. To get the profit LTV, multiply this by your Gross Margin.
What is a good LTV:CAC ratio?
A benchmark LTV:CAC ratio for successful SaaS and e-commerce businesses is 3:1 or higher. This means you make $3 for every $1 spent acquiring a customer. A ratio of 1:1 means you are losing money or breaking even, while a ratio of 5:1+ means you might be under-investing in marketing.
Why is LTV important?
LTV helps you make important business decisions about sales, marketing, product development, and customer support. It tells you how much you can afford to spend to acquire a new customer (CAC).
How can I improve my LTV?
You can improve LTV by increasing the average order value (upselling/cross-selling), increasing purchase frequency (loyalty programs, email marketing), or extending the customer lifespan (improving customer service, reducing churn).
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