Customer Lifetime Value (LTV) Calculator
Estimate how much profit an average customer brings over their lifetime. Choose the simple model (order value and frequency) or the churn model (ARPU and monthly churn), both adjusted for gross margin.
How to calculate customer lifetime value
- Pick a method: simple (order value and frequency) or churn (ARPU and monthly churn rate).
- Enter your numbers, including the gross margin percent you keep on revenue.
- Read the LTV, average lifespan and lifetime revenue, then compare it to your acquisition cost.
Examples
Ecommerce store (simple method)
Avg order $50, 4 orders/year, 3 year lifespan, 60% margin
Lifetime revenue $600, LTV $360
SaaS product (churn method)
ARPU $50/mo, 80% margin, 5% monthly churn
Avg lifespan 20 months, lifetime revenue $1,000, LTV $800
Frequently asked questions
What is customer lifetime value (LTV)?
Customer lifetime value, also called CLV or LTV, is the total profit you expect from an average customer over the whole time they stay with you. It is usually shown after gross margin, so it reflects profit rather than raw revenue.
Which method should I use, simple or churn?
Use the simple method when you know average order value, how often customers buy and how many years they stay (common for ecommerce and retail). Use the churn method for subscriptions, where monthly ARPU and a monthly churn rate are easier to measure.
How is LTV calculated here?
Simple method: average order value times purchases per year times lifespan in years, multiplied by gross margin. Churn method: average lifespan in months is 100 divided by the monthly churn percent, multiplied by ARPU and gross margin.
How does LTV relate to customer acquisition cost?
Compare LTV to your customer acquisition cost (CAC). A common rule of thumb is an LTV to CAC ratio of about 3 to 1. If LTV is below CAC, you are losing money on each customer you acquire.
Should LTV use revenue or gross margin?
Margin is more honest. Two businesses with the same revenue can have very different profit, so this calculator applies your gross margin percent to turn lifetime revenue into a profit-based LTV.
Is my data stored or sent anywhere?
No. The calculation runs in your browser and nothing you type is saved or transmitted. You can use it on real customer numbers without anything leaving your device.
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