Customer LTV Calculator
Calculate the lifetime value of a customer to inform your acquisition budget and strategy.
How many times per year does a customer purchase?
Profit as % of revenue after costs
Cost to acquire one customer (marketing, sales)
Annual cost to retain customer (support, email, etc.)
Customer Lifetime Value
📊 Key Metrics
💡 LTV:CAC Ratio Guide
Excellent - sustainable growth
Good - profitable customer acquisition
Fair - break-even approaching
Poor - losing money on acquisition
📋 Cost Breakdown
💡 LTV Improvement Tips
- • Increase AOV through upsells and cross-sells
- • Improve retention to extend customer lifespan
- • Increase purchase frequency with loyalty programs
- • Reduce CAC through optimized marketing
- • Lower retention costs with automation
- • Target higher-LTV customer segments
Formula
Simple LTV = AOV × Purchase Frequency × Lifespan
Gross Profit = Revenue × Profit Margin
Net LTV = Gross Profit − CAC − (Retention Cost × Lifespan)
LTV:CAC Ratio = LTV / CAC (optimal: 3:1 or higher)
How it works
Simple LTV = AOV × Purchase Frequency × Customer Lifespan Gross Profit = Revenue × Profit Margin (%) Net LTV = Gross Profit − CAC − (Retention Cost × Lifespan) LTV:CAC Ratio = LTV / Customer Acquisition Cost Example: AOV: $50 × Frequency: 24/year × Lifespan: 5 years = $6,000 simple LTV Gross Profit (30%): $1,800 CAC: $20 Annual Retention: $5 (× 5 years = $25) Net LTV: $1,800 − $20 − $25 = $1,755 LTV:CAC Ratio = $1,755 / $20 = 87.75:1 (Excellent) Key Benchmarks: - Good LTV:CAC ratio: 3:1 or higher - Payback period: 6-12 months - SaaS average: 4:1 - E-commerce average: 2-3:1
The customer LTV calculator determines how much profit a customer generates over their lifetime with your business. Enter average order value, purchase frequency, customer lifespan, and costs to calculate LTV, profit margins, and LTV:CAC ratios. Essential for determining sustainable acquisition budgets and growth strategy.
Why this matters
Understanding LTV helps you make data-driven decisions about customer acquisition spending and business profitability. The LTV:CAC ratio determines if your business model is sustainable—you need profitable unit economics. Knowing LTV helps identify which customer segments are most valuable.
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The complete guide to customer ltv calculator
Formulas, examples, and tips explained in plain English