Customer lifetime value estimates how much revenue or gross profit an average customer contributes during the entire relationship with your business. This calculator is built for SaaS teams, retailers, founders and marketers who need a practical limit for customer acquisition spending. Enter average order value, purchase frequency and customer lifespan, then add gross margin and acquisition cost for a more useful net LTV and LTV-to-CAC ratio. Subscription businesses can use monthly churn to estimate customer lifespan automatically.
Enter the average order or subscription value and how often a customer purchases each year.
Add average customer lifespan, gross margin and customer acquisition cost; subscription businesses may enter monthly churn instead.
Review net LTV and the LTV-to-CAC ratio. A higher ratio leaves more room for operating costs and profit, but should be checked by customer segment.
Gross LTV: Average order value × annual purchase frequency × lifespan in years
Net LTV: Gross LTV × gross margin percentage
LTV:CAC: Net LTV ÷ customer acquisition cost
Lifespan from churn: 1 ÷ monthly churn rate
What is a healthy LTV to CAC ratio?
A ratio near 3:1 is a common benchmark for an established business, meaning lifetime gross profit is about three times acquisition cost. The right target varies by industry, payback period, cash flow and growth stage.
How can a business increase customer lifetime value?
Improve retention, purchase frequency, gross margin or average order value through better service, loyalty, subscriptions, upsells and bundles. Measure changes by customer segment because averages can hide important differences.