Customer Lifetime Value (LTV) Calculator

Customer Lifetime Value (LTV or CLV) is the total revenue a business can expect from a single customer account over the entire duration of their relationship. It factors in average purchase value, purchase frequency, and how long customers typically stay. LTV helps you understand how much each customer is worth so you can make informed decisions about acquisition spending and retention investments.

The basic LTV formula is: LTV = Average Revenue Per User (ARPU) × Customer Lifespan. For subscription businesses, this is often calculated as: LTV = Monthly ARPU ÷ Monthly Churn Rate. For example, if your average customer pays $50/month and your monthly churn rate is 5%, your LTV is $50 ÷ 0.05 = $1,000.

A healthy LTV:CAC ratio is generally 3:1 or higher—meaning each customer generates at least 3× what it cost to acquire them. A ratio below 1:1 means you're losing money on every customer. Between 1:1 and 3:1 suggests you need to either reduce acquisition costs or improve retention. Above 5:1 may indicate you're under-investing in growth and could afford to spend more on acquisition.

ARPU (Average Revenue Per User) measures how much revenue a single customer generates in a specific time period (usually monthly or annually). LTV extends that across the entire customer relationship. ARPU is a snapshot; LTV is the full picture. A customer paying $100/month with a 2-year average lifespan has an ARPU of $100/month but an LTV of $2,400.

Churn rate has a massive impact on LTV because it determines customer lifespan. If your monthly churn is 10%, average customer lifespan is 10 months. If you reduce churn to 5%, lifespan doubles to 20 months—and so does LTV. Even small improvements in churn can dramatically increase LTV, which is why retention is often more valuable than acquisition.

There are three main levers: increase average revenue per customer (through upselling, cross-selling, or price increases), increase purchase frequency (through engagement and habit-building), or reduce churn (through better onboarding, customer support, and product improvements). Most startups see the biggest LTV gains from reducing churn, since it compounds over time.

LTV tells you the maximum you can afford to spend acquiring a customer while remaining profitable. It helps you set marketing budgets, evaluate channel effectiveness, forecast revenue, and make decisions about pricing and product investment. Investors also use LTV:CAC ratio as a key metric to assess business sustainability and unit economics.

Common mistakes include using revenue instead of gross profit (which overstates true value), assuming zero churn or using unrealistically low churn rates, not segmenting customers (high-value and low-value customers have very different LTVs), ignoring expansion revenue from upsells, and calculating LTV before you have enough data for reliable churn estimates.