Customer Lifetime Value (LTV) & LTV:CAC Calculator
Calculate customer lifetime value from churn, expected lifetime or repeat purchases, then compare it with CAC and see your payback period.
Calculated entirely in your browser — nothing you enter here is sent to a server.
How lifetime value is calculated
Customer lifetime value (LTV, also called CLV) estimates the gross profit one customer brings in before they leave. This calculator reports it on a gross-margin basis, because comparing lifetime revenue with acquisition cost ignores what it costs to serve the customer and overstates the return.
Expected lifetime (months) = 1 ÷ monthly churn rateLTV = monthly revenue × gross margin × lifetimeRepeat purchase LTV = order value × purchases per year × years × gross marginLTV:CAC = LTV ÷ CACandpayback (months) = CAC ÷ monthly gross profit
Worked example
A subscription earns $50 a month per customer at an 80% gross margin, and 2% of customers cancel each month. The expected lifetime is 1 ÷ 0.02 = 50 months, so lifetime revenue is $2,500 and LTV is $2,500 × 0.8 = $2,000. If acquiring a customer costs $500, LTV:CAC is 4 : 1, and the $40 of monthly gross profit repays that $500 in 12.5 months.
Reading the result
- A 3 : 1 LTV:CAC ratio is a widely quoted rule of thumb for subscription businesses, not a standard; what is healthy depends on your cash position, growth goals and how reliable your churn figure is.
- Churn-based lifetime assumes churn stays constant. With very low churn the lifetime gets long and uncertain — if you have real cohort data, use the expected-lifetime option instead. A churn of 0% is rejected because the formula has no upper limit.
- The payback period matters for cash flow even when the ratio looks strong: a long payback ties up money.
- Not sure what your acquisition cost is? Work it out with the CAC calculator, and your gross margin with the profit margin calculator.