Customer Lifetime Value (LTV) Calculator
The gross profit a customer produces over their life — and what you can pay to get one.
Your numbers
Your result
- Revenue per customer per year
- $2,520.00
- Lifetime revenue
- $10,080
- Lifetime gross profit (LTV)
- $4,234
- Value of their referrals
- $1,693
- Total LTV including referrals
- $5,927
- Implied annual churn rate
- 25%
- First-year gross profit
- $1,058.40
- LTV : CAC ratio
- 17.4:1
- Max CAC at a 3:1 targetThe most you can pay to acquire a customer and still hit your target ratio.
- $1,975.68
17.4:1 LTV to CAC
You can afford up to $1976 per customer and still hit a 3:1 return. If you're spending less than that, you're leaving growth on the table — most established businesses under-spend because they judge marketing on the first sale alone.
Everything runs in your browser. Nothing you type is saved, stored or sent anywhere.
What this number actually tells you
Lifetime value is what a customer is actually worth to you: the gross profit they generate across every purchase they'll ever make, plus the people they send you. Most owners quote average ticket instead and then wonder why they can't out-spend their competition.
It's the number that sets your marketing budget. If a customer is worth $2,100 in lifetime gross profit and you want a 3:1 return, you can spend up to $700 to get one. Businesses that know that number outbid the ones that don't, every time.
Use gross profit, not revenue. Revenue-based LTV inflates the number by the inverse of your margin and leads straight to overspending.
How the math works
- 01Revenue per year = average sale × purchases per year.
- 02Lifetime revenue = revenue per year × years retained.
- 03LTV = lifetime revenue × gross margin %.
- 04Referral value = LTV × referrals generated per customer.
- 05LTV:CAC = total LTV ÷ CAC. Max affordable CAC = total LTV ÷ target ratio.
- 06Implied annual churn = 1 ÷ years retained.
What to do with the answer
- Calculate LTV by customer type. Maintenance-agreement customers and one-time emergency customers are not the same business.
- Use max affordable CAC as your bid ceiling. It turns marketing from a feel decision into a limit.
- Improve retention before acquisition. Extending average retention by one year is usually cheaper than buying the equivalent number of new customers.
- Track referrals deliberately. They're often 20–40% of true LTV and almost nobody measures them.
Want someone to read these numbers with you?
The Growth Assessment is a 30-minute conversation about what your numbers are telling you and what to fix first. No pitch deck, no PDF.
Schedule Your Growth Assessment Or call (737) 888-0415Questions owners ask about this
How do I calculate customer lifetime value?
Multiply average sale by purchases per year by years retained, then multiply by gross margin. Add referral value if you can estimate it. Use gross profit rather than revenue so the number reflects what you actually keep.
What is a good LTV to CAC ratio?
3:1 or better is the standard target. Below 2:1 the growth engine is too thin to scale safely. Far above 5:1 usually means you're under-investing in marketing and could profitably spend more.
How do I increase lifetime value?
Four levers: raise price, increase purchase frequency (maintenance plans, follow-up, reminders), extend retention through service quality and communication, and drive referrals. Retention and frequency are usually the cheapest to move.
Use these next
Marketing & Sales
CAC Calculator
What a customer costs you across marketing, sales and fees — and your payback period.
Marketing & Sales
Marketing ROI Calculator
Whether your marketing makes money — measured on gross profit, not revenue.
Marketing & Sales
Lead Value Calculator
What one lead is worth in gross profit — and the most you should ever pay for one.
Profit & Pricing
Price Increase Impact Calculator
See what a 5% increase actually does — and how many customers you can afford to lose.