CLTV Calculator — Customer Lifetime Value
Enter your average order value, purchase frequency, customer lifespan, gross margin and acquisition cost to get the gross-profit CLTV, net CLTV, LTV:CAC ratio and CAC payback period.
per year
years
%
Total gross profit generated over the customer lifespan
- 1
Annual revenue per customer
120 × 4 = 480 - 2
Annual gross profit
480 × 60% = 288Revenue multiplied by the gross margin percentage. - 3
Gross-profit CLTV
288 × 5 years = 1,440
How does this calculator work?
CLTV = AOV × annual purchases × lifespan × gross margin %. Net CLTV subtracts the customer acquisition cost; LTV:CAC divides CLTV by CAC (aim for ≥ 3x). CAC payback period = CAC ÷ (annual revenue × margin %) × 12. All figures are averages — actual cohort distributions will vary. Enter your metrics to see the full breakdown.
Formula
How this is calculated
Customer Lifetime Value (CLTV, also written LTV) measures the total gross profit a business can expect from a single customer over the entire relationship. The foundational formula multiplies three drivers: average order value (AOV, how much a customer spends per transaction), purchase frequency (how many times per year they buy) and customer lifespan (how many years they remain active). This gives lifetime revenue; multiplying by the gross margin percentage converts revenue to gross profit, which is the figure that actually matters for profitability decisions.
To assess whether acquisition spending is rational, the LTV:CAC ratio compares lifetime gross profit to the customer acquisition cost (CAC). A ratio of 3:1 is often cited as a healthy SaaS or e-commerce benchmark — meaning every dollar spent acquiring a customer returns three dollars in gross profit over the lifetime. Below 1:1 the business loses money on every customer; above 5:1 may suggest under-investment in growth. The CAC payback period (months = CAC ÷ monthly gross profit) tells you how quickly the acquisition cost is recovered.
These are estimates, not accounting figures. Inputs are averages with real variance — some customers churn in month one, others stay for a decade. The model assumes a constant purchase rate and margin over the lifespan, ignores time-value of money (no discount rate), and does not model retention curves. For a more rigorous treatment, use a cohort-based or probabilistic model (e.g. the BG/NBD model).
Frequently asked questions
A 3:1 ratio is widely considered healthy in SaaS and subscription businesses: every dollar of acquisition cost generates three dollars of lifetime gross profit. Below 1:1 the unit economics are negative. Above 5:1 may indicate under-spending on growth and leaving market share on the table.
Revenue CLTV (AOV × frequency × lifespan) is the raw lifetime spending. Gross-profit CLTV multiplies by the gross margin percentage to get what actually remains after the cost of goods sold. LTV:CAC comparisons should always use gross-profit CLTV, not revenue CLTV.
If you know your monthly churn rate c, the average customer lifespan in months is 1 ÷ c. For example, a 5% monthly churn rate implies 1 ÷ 0.05 = 20 months ≈ 1.67 years. Divide by 12 to convert months to years before entering the value here.
Also known as
TG we-Calculate Editorial Team. (2026). CLTV Calculator — Customer Lifetime Value [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/cltv-calculator
TG we-Calculate Editorial Team. "CLTV Calculator — Customer Lifetime Value." TG we-Calculate. 2026. https://we-calculate.com/calculator/cltv-calculator.
TG we-Calculate Editorial Team, "CLTV Calculator — Customer Lifetime Value," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/cltv-calculator
@misc{wecalculate_cltv_calculator, title = {CLTV Calculator — Customer Lifetime Value}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/cltv-calculator}}, year = {2026}, note = {TG we-Calculate} }
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