Estimate customer lifetime value two ways — retail-style and subscription-style — and see your LTV:CAC ratio.
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| Method | Assumptions | LTV | LTV:CAC |
|---|
Benchmark: LTV:CAC ≥ 3 is generally considered healthy. A ratio below 1 means you're losing money per customer acquired.
The LTV (Customer Lifetime Value) Calculator estimates how much total value a typical customer generates for your business — a number that underpins nearly every acquisition and pricing decision you'll make. Because different business models earn revenue differently, this calculator gives you two methods side by side: a retail/transactional model built around repeat purchases, and a subscription/SaaS model built around monthly revenue and churn. It's designed for founders, marketers, and finance teams who need to know how much a customer is really worth before deciding how much to spend acquiring one.
The retail method multiplies your average purchase value by how often a customer buys per year and by how many years they typically stay a customer — a simple, intuitive model for e-commerce and repeat-purchase businesses. The subscription method instead starts from monthly churn rate, converts it into an implied customer lifespan in months (1 ÷ churn rate), and multiplies that lifespan by monthly revenue and gross margin to get a profit-based LTV — the standard approach used by SaaS and subscription companies. If you enter a Customer Acquisition Cost, the calculator also computes your LTV:CAC ratio using the subscription LTV as the headline figure, since it's the industry-standard way growth and finance teams frame unit economics.
LTV sets the ceiling on how much you can profitably spend to acquire a customer. Without it, a CAC number is meaningless — $200 to acquire a customer is a disaster if LTV is $100, and a bargain if LTV is $2,000. Comparing both methods also reveals how sensitive your business is to churn: shaving even a percentage point off monthly churn can substantially raise implied lifespan and LTV, often more than any pricing change could.
LTV estimates the total value a customer generates over their relationship with your business.
The subscription formula uses gross margin so LTV reflects actual profit contribution, not just top-line billings — a much more useful number for CAC comparisons.
Small changes in monthly churn create large swings in implied lifespan and LTV. Reducing churn is often the highest-leverage lever a subscription business has.
LTV in isolation doesn't tell you whether growth is profitable. Always read it against Customer Acquisition Cost as the LTV:CAC ratio.
Common questions about LTV calculations
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