LTV Calculator

Customer Lifetime Value (LTV) is the total revenue you can expect from a customer over their entire relationship with your business. Enter average revenue per customer, gross margin, and churn rate to calculate LTV. Compare it against your Customer Acquisition Cost (CAC) to check whether your unit economics are healthy — an LTV:CAC ratio above 3:1 is generally considered strong.

All processing happens in your browser. No data is sent to any server.

Frequently Asked Questions

What is customer lifetime value (LTV)?
LTV is the total revenue a business expects to earn from a single customer over the entire duration of the relationship. It is used to determine how much you can afford to spend acquiring a customer (CAC) while remaining profitable.
What is the simple LTV formula?
For subscription businesses: LTV = Monthly ARPU / Monthly Churn Rate. For example, with $79 ARPU and 3% monthly churn: LTV = $79 / 0.03 = approximately $2,633. This assumes constant ARPU and a constant churn probability each month.
What is a good LTV:CAC ratio?
The benchmark for a healthy SaaS business is 3:1 or higher (LTV at least three times CAC). Below 3:1 usually means the business is spending too much to acquire customers relative to what they generate. Above 5:1 may indicate underinvestment in growth.
What is the payback period and why does it matter?
Payback period = CAC / Monthly ARPU. It shows how many months of revenue are needed to recoup the cost of acquiring a customer. Shorter payback periods (under 12 months) mean faster cash recovery and less dependence on outside capital for growth.

Related Tools

Related Articles