Customer Lifetime Value Calculator
Calculate Customer Lifetime Value (LTV) and LTV/CAC ratio to evaluate your unit economics.
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Frequently Asked Questions
How is LTV calculated?
LTV (Lifetime Value) is calculated by taking the Average Revenue Per User (ARPU), multiplying it by gross margin, and dividing it by monthly churn rate.
What is a good LTV to CAC ratio?
A healthy SaaS business has an LTV:CAC ratio of 3:1 or higher. This means for every $1 spent acquiring a customer, you generate $3 in expected lifetime value. Below 1 means you lose money per customer.
Why include gross margin in LTV?
Because revenue is not value. If serving a customer costs 20% of their subscription in server and support costs, your actual lifetime value generated is only 80% of their revenue.
Understanding Customer Lifetime Value
Customer Lifetime Value (LTV) is the total estimated gross profit a single customer will generate over the entirety of their relationship with your brand. Strong LTV ensures long-term profitability.