What is the Customer Lifetime Value (LTV) Calculator?
A customer lifetime value calculator (also called an LTV calculator or CLV calculator) estimates the total gross profit a single customer generates for your business across the entire duration of their relationship. Rather than evaluating marketing campaigns purely on first-order revenue, measuring gross-profit LTV reveals the true long-term compounding value of repeat purchases and customer retention.
This free LTV to CAC ratio calculator pairs your customer lifetime gross profit directly against your Customer Acquisition Cost (CAC). Whether you run a direct-to-consumer ecommerce brand, a recurring subscription service, or a repeat B2B account model, you can input customer lifespan directly in years or toggle to annual churn rate (%) to see your lifetime revenue, gross-profit LTV, LTV:CAC health verdict, and CAC payback period in months.
How to use the Customer Lifetime Value (LTV) Calculator
Calculate your customer lifetime value and acquisition payback in five simple steps:
- Enter Average Order Value (AOV): Input the average dollar revenue collected each time a customer completes an order or transaction.
- Set Purchases per Customer per Year: Enter the average number of orders a typical customer places within a 12-month period.
- Choose Lifespan (Years) or Annual Churn (%): Enter the average number of years a customer stays active, or click Annual Churn % to enter your annual customer attrition rate (between 1% and 100%) and let the calculator derive lifespan automatically.
- Enter Gross Margin (%) & Optional CAC: Input your gross profit margin percentage after direct product COGS, and optionally enter your Customer Acquisition Cost (CAC) to unlock your LTV:CAC ratio scale and payback months.
- Simulate Retention & Export PDF: Use the What-If lifespan slider (0.5 to 10 years) and benchmark table (1, 2, 3, and 5 years) to see how retention lifts LTV, then click Download Report for a one-page A4 PDF.
Customer Lifetime Value (LTV) Calculator formula
Understanding how to calculate customer lifetime value on a gross-profit basis and connect it to acquisition payback requires the following formulas:
To maintain a minimum 3:1 LTV:CAC ratio, your maximum allowable CAC is LTV ÷ 3.
Worked example
Let's step through a complete example using the exact default numbers pre-loaded in the calculator above:
- Average order value (AOV): $50
- Purchases per customer per year: 4
- Customer lifespan in years: 3 years
- Gross margin: 40%
- Customer acquisition cost (CAC): $60
Each customer generates $600.00 in lifetime revenue and $240.00 in gross profit over 3 years. Against a $60.00 CAC, your business achieves a healthy 4.00:1 LTV:CAC ratio, pays back acquisition spend in 9.0 months, and could spend up to $80.00 per customer while still maintaining a 3:1 ratio.
Why it matters
Knowing your gross-profit LTV and CAC payback period transforms how you budget for growth. Brands that only track first-order ROAS often pause profitable campaigns that break even on day one but compound into 4:1 or 5:1 returns over a customer's multi-year lifespan—or conversely, overspend on high-churn customers who never pay back their acquisition cost.
To connect customer lifetime value with the rest of your growth funnel, pair this calculator with our free ROAS calculator, check your first-order ad threshold in the break-even ROAS calculator, reverse-engineer your monthly funnel quotas with the inbound lead calculator, or audit your per-unit gross retention in the gross profit margin calculator.