How is customer lifetime value (LTV) calculated?

LTV = (Average revenue per customer × Gross margin) × Average customer lifespan. A customer spending $500/year at 60% margin over 3 years has an LTV of $900.

Customer Lifetime Value (LTV) Calculator

Estimate customer lifetime value from revenue and retention assumptions.

This tool runs in your browser. None of your data is saved or sold.

Average revenue per customer per year ($)

Gross margin (%)

Average customer lifespan (years)

Annual churn rate (%)

About This Calculator

LTV is the total profit you expect to generate from a customer over their entire relationship with your business. It determines how much you can rationally spend to acquire each customer. The LTV:CAC ratio — LTV divided by CAC — is the core unit economics metric for any growth business.

Estimates only — not financial, tax, legal, or investment advice. Verify important results with a qualified professional before making decisions.

annual profit per customer = revenue × gross margin %; effective lifespan = 1 ÷ annual churn rate; customer LTV = annual profit × effective lifespan