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LTV calculator
Lifetime value here is gross profit, not revenue. Use monthly churn for a subscription, or orders per year for a purchase business.
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How is customer lifetime value calculated?
For a subscription, monthly revenue per customer times gross margin, divided by monthly churn. For a purchase business, average order value times orders per year times the number of years you keep the customer, times gross margin.
What is a healthy LTV to CAC ratio?
A common planning target is 3 to 1: lifetime gross profit at least three times the cost of acquiring the customer. That is a convention, not a rule. Payback period matters just as much if cash is tight.
Should I use revenue or gross profit?
Gross profit. An LTV built on revenue, with no margin, will say you can afford a CAC you cannot. This calculator applies the margin you enter.