LTV Calculator
Calculate your Customer Lifetime Value and optimize your acquisition strategy!
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Customer Lifetime Value
$580
Total revenue per customer
How We Calculate Your LTV
Here's how we calculate your Customer Lifetime Value:
Monthly Price
Subscription price
Lifespan
Based on 5% churn
LTV
Lifetime Value
Total Revenue!
Tips & Insights
- 🚀 Excellent ROI (4.8x)! Your customer economics are strong. Prime territory for aggressive scaling.
- ✅ Good payback period! You're recovering acquisition costs quickly, which is great for cash flow.
What is Customer Lifetime Value?
Customer Lifetime Value (LTV or CLV) is the total revenue you can expect from a single customer over their entire relationship with your business. It answers the most important question in growth: how much is a customer worth?
Know your LTV and you know exactly how much you can afford to spend acquiring each customer. Spend less than your LTV and you grow. Spend more and you bleed cash, no matter how fast you're growing. For a deeper breakdown, see our Lifetime Value glossary entry.
LTV Formula
The formula depends on your business model:
Subscription LTV = Monthly Price × (1 ÷ Monthly Churn Rate)
E-commerce LTV = Average Order Value × Purchase Frequency × Customer Lifespan
For example, a SaaS product at $29/month with 5% monthly churn has an average customer lifespan of 20 months, so the LTV is $29 × 20 = $580. The calculator above handles both models and shows your exact numbers.
The LTV:CAC Ratio - The Golden Metric
LTV alone doesn't tell the full story. The real metric is LTV divided by CAC (Customer Acquisition Cost). This ratio tells you whether your growth engine is sustainable:
- Below 1:1 - you're losing money on every customer. Fix immediately.
- 1:1 to 2:1 - barely breaking even after overhead costs. Tighten spend or boost retention.
- 3:1 - the benchmark. You earn $3 for every $1 spent acquiring customers.
- 5:1+ - excellent unit economics. You can scale aggressively.
Add your CAC in the calculator above to see your exact ratio, ROI, and payback period. If your ratio is below 3:1, focus on increasing LTV through better retention or increasing prices, or decreasing CAC through more efficient acquisition.
How to Increase LTV
There are three levers, and the best companies pull all three:
- Reduce churn. The biggest LTV driver for subscriptions. Dropping churn from 5% to 3% monthly extends average lifespan from 20 to 33 months, a 65% LTV increase.
- Increase average order value. Upsells, bundles, and premium tiers get more revenue per transaction without acquiring new customers.
- Increase purchase frequency. Email marketing, loyalty programs, and subscription models turn one-time buyers into repeat customers.
Once you know your LTV, use it to set acquisition budgets. Our Ads Profit Calculator shows whether your ad campaigns are profitable given your customer value, and the ROI Calculator measures your overall return.
Frequently Asked Questions
What is Customer Lifetime Value (LTV)?
Customer Lifetime Value (LTV) is the total revenue you expect from a single customer over their entire relationship with your business. For e-commerce, it's calculated as: Average Order Value × Purchase Frequency × Customer Lifespan. For subscriptions, it's: Monthly Price × Subscription Length (based on churn rate).
What's a good LTV?
A good LTV depends on your industry, but generally you want your LTV to be at least 3x your Customer Acquisition Cost (CAC). For SaaS businesses, LTV of $500-$5000+ is common. For e-commerce, $100-$500+ is typical. The key is that your LTV should comfortably exceed your acquisition costs.
How do I increase my LTV?
There are three main ways: 1) Increase Average Order Value through upsells, bundles, or premium tiers. 2) Increase Purchase Frequency with email marketing, loyalty programs, or subscriptions. 3) Reduce Churn through better onboarding, customer success, and product improvements. Check out our Ads Profit Calculator to optimize your acquisition strategy.
What is Payback Period and why does it matter?
Payback Period is how long it takes to recover your customer acquisition cost through profit. It matters because it affects your cash flow - a shorter payback period (under 12 months) means you can reinvest in growth faster. SaaS companies typically aim for 5-7 months.
What's the difference between LTV and ROI?
LTV measures the total revenue from a customer over their lifetime. ROI measures how much profit you make for every dollar spent acquiring that customer. For example: if LTV is $600 and CAC is $100, your ROI is 5x (you make $500 profit on a $100 investment). Both are important for understanding your business health.
How is churn rate related to LTV?
Churn rate directly impacts your subscription length, which determines LTV. For example, 5% monthly churn means customers stay ~20 months on average. Lower churn = longer customer lifespan = higher LTV. Reducing churn by just 1-2% can significantly increase your LTV and profitability.
When should I track LTV?
You should track LTV if you're running paid advertising, planning to scale, or have repeat customers. It's essential for making smart acquisition decisions - knowing your LTV helps you determine how much you can afford to spend acquiring each customer. Pair it with our ROAS Calculator to optimize your ad campaigns.
What is the difference between CLV and LTV?
They mean the same thing. CLV (Customer Lifetime Value) and LTV (Lifetime Value) are used interchangeably. Some companies also write it as CLTV. All three refer to the total revenue expected from a customer over their entire relationship with your business. We use LTV on this page, but the formulas and concepts are identical.
What is the 80/20 rule for customer lifetime value?
The 80/20 rule (Pareto principle) applied to LTV means roughly 20% of your customers generate 80% of your total lifetime value. This is why segmenting customers by value matters. Focus your retention efforts and premium support on your highest-value cohort. The calculator above helps you identify what that top-tier customer looks like by modeling different scenarios.
How do you calculate LTV for a SaaS company?
For SaaS, the standard formula is LTV = ARPA ÷ Monthly Churn Rate, where ARPA is Average Revenue Per Account. To factor in margins: LTV = (ARPA × Gross Margin) ÷ Monthly Churn Rate. Example: $50/mo ARPA, 80% gross margin, 4% monthly churn = ($50 × 0.80) ÷ 0.04 = $1,000 LTV. Use the subscription mode in the calculator above to compute yours.
How do you calculate LTV for ecommerce?
For ecommerce, use LTV = Average Order Value × Purchase Frequency × Customer Lifespan. Example: $75 AOV × 4 orders/year × 3 years = $900 LTV. To get profit-based LTV, multiply by your gross margin. Switch to e-commerce mode in the calculator above and enter your numbers to see your exact LTV, LTV:CAC ratio, and payback period.