Customer lifetime value calculator.
Work out what an average customer is worth to your business over the whole time they buy from you, in revenue and in profit. Add what it costs to win a customer and see your LTV to CAC ratio: the clearest sign of whether your marketing pays.
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Results
How to use the customer Lifetime Value (LTV) Calculator
- Enter the average amount a customer spends per order or visit.
- Enter how often they buy in a year, and for how many years they usually stay.
- Add your profit margin to see lifetime profit, not just revenue.
- Add your cost to win a customer to see the LTV to CAC ratio.
The lifetime value formula
Lifetime value = average order value × purchases per year × years as a customer. A salon client who spends PKR 3,000 a visit, comes 8 times a year and stays 3 years is worth PKR 72,000 in revenue. Multiply by your profit margin to see what they're worth in profit, which is the number to use when deciding how much to spend winning them.
LTV to CAC: the ratio that matters
CAC is your customer acquisition cost: everything you spend on marketing and sales divided by the new customers it brings. Compare it with lifetime profit.
- Below 1:1: every new customer loses money over their lifetime.
- Around 3:1: the healthy benchmark many businesses aim for.
- Above 5:1: you could probably spend more on marketing and grow faster.
Raising lifetime value
- Bring customers back: reminders, follow-ups and email to past customers.
- Raise the average order with bundles, add-ons and packages.
- Keep customers longer with good service and asking for feedback.
- Turn happy customers into reviews and referrals. Our Google review link generator makes asking easy.
Using LTV in your marketing
Once you know lifetime profit, you know the most you can afford to pay for a customer, which tells you how high to bid on ads and how much SEO is worth. Most businesses that think a channel is "too expensive" are comparing it with a first sale rather than a lifetime. Our digital marketing and SEO services set targets from exactly these numbers.
About the customer Lifetime Value (LTV) Calculator.
How do you calculate customer lifetime value?
LTV = average order value × purchases per year × years as a customer. Multiply by your profit margin to get lifetime profit.
What is a good LTV to CAC ratio?
About 3:1 is the usual benchmark: a customer brings three times what they cost to win. Below 1:1 loses money; above 5:1 suggests you could spend more on growth.
What if I don't know how long customers stay?
Estimate from your records, or use 1 ÷ churn rate. If 25% of customers stop buying each year, the average customer stays about 4 years.
Should LTV use revenue or profit?
Profit, when you compare it with acquisition cost. Revenue LTV overstates what you can afford to spend.
Is this the same as CLV or CLTV?
Yes. LTV, CLV and CLTV all mean customer lifetime value.
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