Free Tool · No Signup

Customer Lifetime Value Calculator

What one customer is actually worth over the years they stay with you — and the most you can afford to spend to win one. Add your acquisition numbers to see your LTV:CAC ratio and how fast each customer pays back.

Catalog drawing: a brass gauge whose needle is a small heartCatalog No. 109 · Customer Worth Meter

Customer economics

Gross margin = what's left of each sale after the direct cost of delivering it (materials, product cost, sub-labor, payment fees). It's the part that actually accrues to you, so LTV is measured on margin — not revenue.

Acquisition (optional — unlocks LTV:CAC)

Include ad spend, lead-gen subscriptions, and the share of payroll spent chasing new customers. Leave blank if you only want lifetime value.
Customer lifetime value (on margin)
$0
— lifetime revenue
Add acquisition numbers for a verdict
Acquisition cost (CAC)
—
LTV : CAC ratio
—
Payback period
—
Target cost / customer (3:1)
—

Per customer, over their lifetime

Revenue
—
Margin (LTV)
—
Cost to win
—

What moves LTV most

Keep customers 1 more yearRetention beats acquisition
—
Lift gross margin 5 pointsPrice or cost discipline
—
One more purchase a yearReorder / upsell
—
Cut acquisition cost 20%Convert more of the same spend
—

How it works

Works out what one customer is worth in gross margin over their lifetime, plus your cost to win one and payback time if you add acquisition numbers.

  1. Lifetime revenue = Average sale / order value × Purchases per year × Customer lifespan (years).
  2. Customer lifetime value (LTV) = lifetime revenue × Gross margin %. LTV is measured on margin, not on revenue.
  3. Acquisition cost (CAC) = Marketing & sales spend ÷ New customers won. It shows only when both are above zero. LTV : CAC ratio = LTV ÷ CAC.
  4. Payback (months) = CAC ÷ monthly margin per customer, where monthly margin = Average sale × Purchases per year × Gross margin % ÷ 12. Target cost / customer (3:1) = LTV ÷ 3.
  5. The verdict labels a ratio of 3:1 or more Healthy, from 1:1 up to 3:1 Thin, and below 1:1 Underwater.

Questions

What goes into marketing and sales spend?
Ad spend, lead-gen subscriptions, and the share of payroll spent chasing new customers. Enter it per month, along with the new customers you won that month. Leave both blank if you only want lifetime value.
Why is LTV based on margin and not revenue?
Gross margin is what is left of each sale after the direct cost of delivering it, such as materials, product cost, subcontract labor and payment fees. Revenue includes money you spend to deliver the work.
What does the 3:1 target mean?
This page uses an LTV : CAC ratio of 3:1 as its target. At 3:1, a customer's lifetime margin is three times what it cost to win them. Target cost / customer shows the most you could spend to land exactly on 3:1.

More free tools

Same deal: free, no signup, and it runs in your browser.