LTV Calculator
Find out what a customer is really worth over their whole relationship with you. Enter average order value, purchase frequency, and lifespan to get customer lifetime value instantly, with the formula explained and LTV:CAC benchmarks for context.
Calculate your LTV
How to calculate LTV
How to calculate LTV comes down to three numbers: average order value, purchase frequency, and customer lifespan. Multiply them together. A customer who spends $80 per order, buys 3 times a year, for 4 years has a revenue LTV of $80 × 3 × 4 = $960.
Multiply by gross margin to reach profit LTV — at a 60% margin that same customer is worth $576 in gross profit. The LTV calculation matters because it sets the ceiling on what you can afford to spend acquiring a customer in the first place. This LTV calculator returns both the revenue and profit figures so you can see the gap at a glance.
LTV:CAC ratio benchmarks in 2026
LTV means little on its own; it earns its keep next to customer acquisition cost. The LTV:CAC ratio is the standard health check for a subscription or e-commerce business.
| LTV:CAC ratio | What it signals |
|---|---|
| Below 1:1 | Losing money on every customer acquired |
| 1:1 – 3:1 | Under-investing in growth or margins too thin |
| ~3:1 | Widely cited healthy benchmark for SaaS |
| Above 5:1 | Often a sign you could spend more on growth |
The 3:1 rule of thumb is a starting point, not a law — capital-efficient businesses and different margin profiles shift the target up or down.
How to use this calculator
- Enter your average order value. Add the average revenue per order. This is the starting point for how to calculate LTV for any subscription or repeat-purchase business.
- Add purchase frequency and lifespan. Enter how many times a customer buys per year and how many years they stay. Together these two numbers drive the full LTV calculation.
- Add margin to get profit LTV. Optionally enter gross margin so the customer lifetime value calculator returns profit rather than revenue. Then compare the result to your CAC using the 2026 ratios below.
Frequently asked questions
How do you calculate LTV?
Multiply average order value by purchase frequency per year and by customer lifespan in years. An $80 order, 3 times a year, for 4 years is a $960 revenue LTV. Multiply by gross margin for profit LTV. That is the core LTV calculation, and the tool above runs it instantly.
What is a good LTV:CAC ratio in 2026?
Around 3:1 is the widely cited healthy benchmark: three dollars of lifetime value for every dollar of acquisition cost. Below 1:1 you lose money on each customer, while a ratio well above 5:1 often means you could safely invest more in growth.
What is the difference between revenue LTV and profit LTV?
Revenue LTV is total sales per customer; profit LTV applies your gross margin so it reflects the money you actually keep. Always compare profit LTV, not revenue LTV, against CAC — otherwise the ratio flatters you.
How does churn affect LTV?
Churn sets customer lifespan. Lower churn means customers stay longer and buy more, so LTV rises. Even a one-point reduction in monthly churn can extend average lifespan by many months and materially increase lifetime value.
Revenue LTV vs profit LTV vs CAC payback
Always be clear which LTV you are quoting. Revenue LTV ignores costs and looks impressive; profit LTV, after gross margin, is the number that should exceed your CAC. A common target is recovering CAC within 12 months and keeping profit LTV at least three times CAC. Read LTV alongside churn, too — even small drops in monthly churn extend customer lifespan and lift LTV substantially.