Customer LTV Calculator
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Customer LTV
$0
LTV (with margin)
$0
Max Allowable CAC (LTV÷3)
$0
Annual Customer Value
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Customer Lifetime Value (LTV) estimates the total revenue a business can expect from a single customer over the entire relationship, not just their first purchase. Founders and marketers use it to decide how much they can afford to spend acquiring a new customer while staying profitable over time. It is one of the most important numbers for any subscription or repeat-purchase business.
Formula
LTV = Average Order Value x Purchase Frequency (per year) x Average Customer Lifespan (years)
Purchase Frequency is how many times an average customer buys in a year, and Average Customer Lifespan is how many years they typically keep buying from you before churning to a competitor or stopping altogether, both of which you can pull straight from your order history.
Example
Example: your average order value is $50, customers buy 4 times a year, and stay with you for 3 years on average. LTV = 50 x 4 x 3 = $600. That $600 is the ceiling you should be working against when deciding what you can afford to spend acquiring each new customer.
Industry Benchmark
LTV should generally exceed 3x Customer Acquisition Cost (CAC) for sustainable unit economics, so the two numbers are always worth calculating together rather than in isolation, since either one alone can be misleading about how healthy the business actually is.
FAQ
What is a good LTV:CAC ratio?
A widely cited rule of thumb is that LTV should be at least 3x your Customer Acquisition Cost. A ratio below that suggests you are spending too much to acquire customers relative to what they are worth over time, while a much higher ratio can mean there is room to invest more aggressively in growth without hurting profitability.
How do I increase customer lifetime value?
The formula gives you the three levers directly: raise average order value with bundles or upsells, increase purchase frequency with email or SMS re-engagement and subscriptions, or extend customer lifespan with loyalty programs and better retention. Improving any one of the three increases LTV, and improving two or three at once compounds the effect significantly over the full customer relationship.
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