Customer Lifetime Value (LTV) Calculator
Calculate the true lifetime value of your customers and discover your break-even timeline.
How to Use This Calculator
1
Enter Revenue Metrics
Input average revenue per customer, purchase frequency, and gross margin percentage.
2
Set Retention Data
Enter customer lifespan in months or years, or use churn rate to calculate expected lifetime automatically.
3
Analyze Lifetime Value
See LTV with breakdowns by segment, the LTV:CAC ratio, and sensitivity analysis across retention scenarios.
Key Terms
- LTV
- Lifetime Value — the total net profit expected from a customer over the entire relationship.
- ARPU
- Average Revenue Per User — typically calculated monthly or annually.
- Churn Rate
- The percentage of customers who stop paying during a given period.
- Gross Margin
- Revenue minus cost of goods sold, expressed as a percentage.
- Cohort Analysis
- Tracking LTV for groups of customers acquired in the same period to identify trends.
Real-World Examples
Example 1
SaaS Product
ARPU: $99/mo, Gross Margin: 80%, Monthly Churn: 3%
LTV: ($99 × 0.80) / 0.03 = $2,640. Average lifespan: 33 months.
Example 2
E-Commerce Store
AOV: $65, Purchases/Year: 4.2, Margin: 35%, Lifespan: 3.5 years
LTV: $65 × 4.2 × 0.35 × 3.5 = $335.79.
LTV Impact of Churn Reduction
| Monthly Churn | Avg Lifespan | LTV (at $100 ARPU, 80% margin) |
|---|
| 8% | 12.5 months | $1,000 |
| 5% | 20 months | $1,600 |
| 3% | 33 months | $2,667 |
| 2% | 50 months | $4,000 |
| 1% | 100 months | $8,000 |
Maximizing Customer Lifetime Value
LTV Is a Growth Lever
Improving LTV is often more profitable than acquiring new customers. Reducing churn from 5% to 3% increases LTV by 67% without spending a single additional marketing dollar. The three levers are: increase revenue per customer (upsells, cross-sells, price increases), improve retention (reduce churn), and expand gross margin (lower COGS).
LTV:CAC: The Golden Ratio
A 3:1 LTV:CAC ratio is the benchmark for a healthy, scalable business. Below 1:1 means every customer loses money. Between 1:1 and 3:1, the business works but is fragile. Above 5:1 may indicate you are under-investing in growth and leaving market share on the table.