Customer Lifetime Value Calculator (CLV and LTV:CAC)
Customer lifetime value (LTV) is the gross profit a customer brings over the whole relationship. For a subscription it is revenue per customer a month × gross margin ÷ monthly churn: 50 a month at an 80% margin with 2.5% churn gives an LTV of 1,600. Against a CAC of 400 that is 4 : 1.
Pick subscription or repeat purchases and enter your numbers in any currency. You get customer lifetime, revenue LTV and gross-margin LTV. Add your customer acquisition cost (CAC) to see the LTV:CAC ratio, the months to pay CAC back and the most you can spend for 3 : 1.
LTV formulas
| Figure | Formula |
|---|---|
| Customer lifetime (months) | 1 ÷ churn |
| Subscription LTV | ARPA × GM ÷ churn |
| Repeat-purchase LTV | AOV × F × T × GM |
| LTV:CAC ratio | LTV ÷ CAC |
| CAC payback (months) | CAC ÷ (ARPA × GM) |
ARPA: revenue per customer a month. GM: gross margin. Churn: share of customers lost a month. AOV: average order value. F: orders a year. T: years a customer stays. CAC: customer acquisition cost.
Example: a subscription
A software plan brings 50.00 a month per customer at an 80% gross margin, and 2.5% of customers cancel each month. A customer stays 1 ÷ 0.025 = 40 months on average, so revenue LTV is 50 × 40 = 2,000.00 and LTV is 2,000 × 80% = 1,600.00. Winning a customer costs 400.00, so LTV:CAC is 1,600 ÷ 400 = 4 : 1, and 40.00 of gross profit a month pays the CAC back in 10 months.
Not sure what a customer costs you? The customer acquisition cost calculator works it out from your marketing and sales spend, with the same example customer.
Example: repeat purchases
A shop’s customers spend 60.00 an order, order 4 times a year and stay 3 years: 720.00 of revenue. At a 40% gross margin LTV is 288.00. To keep a 3 : 1 ratio the shop can spend up to 96.00 to win a customer.
LTV:CAC benchmarks
| What it usually means | LTV:CAC |
|---|---|
| Each new customer loses money | below 1 : 1 |
| Profitable, but little room for overhead and growth | 1 : 1 to 3 : 1 |
| Common target for a healthy business | about 3 : 1 |
| Room to spend more on marketing and sales | above 5 : 1 |
Frequently asked questions
How do you calculate customer lifetime value?
For a subscription, divide the gross profit a customer brings each month by your monthly churn rate: 50 a month at an 80% gross margin with 2.5% churn gives 40 ÷ 0.025 = 1,600. For repeat purchases, multiply average order value by orders a year, by the years a customer stays and by your gross margin.
What is a good LTV to CAC ratio?
About 3 : 1 is the common benchmark: a customer brings three times what it cost to win them. Below 1 : 1 you lose money on every new customer. Far above 5 : 1 can mean you are spending too little on growth and could win customers faster.
Why use gross margin and not revenue?
Revenue includes the cost of serving the customer: hosting, support, goods and payment fees. Only the gross profit is left to pay back what you spent to acquire them, so LTV for LTV:CAC uses gross margin. Leave the margin empty to see revenue LTV alone.
How does churn rate affect LTV?
Average customer lifetime is one divided by churn. At 5% monthly churn a customer stays about 20 months; at 2.5% about 40 months, so LTV doubles. Cutting churn is often the cheapest way to raise lifetime value. Use monthly churn with monthly revenue, or annual with annual.
What is the CAC payback period?
It is the number of months of gross profit a customer needs to repay their acquisition cost: CAC divided by gross profit a month. With a CAC of 400 and 40 of gross profit a month, payback is 10 months. Many subscription businesses aim for 12 months or less.
What is the difference between LTV and CLV?
None: LTV (lifetime value), CLV and CLTV (customer lifetime value) are names for the same figure. Some teams also discount future profit to today’s money or add expansion revenue; this calculator uses the simple, widely used formulas shown below.
Related tools: customer acquisition cost (CAC) calculator, churn rate calculator, contribution margin calculator. More on sales and running a sales team on the SalesBond blog and the home page.
Official sources
- Wikipedia, Customer lifetime value — monthly revenue × gross margin ÷ monthly churn rate.
- Andreessen Horowitz, 16 Startup Metrics — customer lifetime = 1 ÷ monthly churn, LTV and CAC.
- Shopify, Customer Lifetime Value — subscription CLV and the 3 : 1 LTV-to-CAC benchmark.
- HubSpot, How to Calculate Customer Lifetime Value — average purchase value, purchase frequency and customer lifespan.
Updated on Nov 6, 2026. This calculator is for information only and is not tax, legal or payroll advice. Results are averages from the formulas above and assume steady revenue, margin and churn. They are not discounted to today’s money and leave out upsells.
