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Owais Khan Software Reviews

Customer Lifetime Value Calculator

Lifetime value, LTV to CAC ratio and payback from your own numbers.

Calculate customer lifetime value

Work out churn

= 5% churn

Customer lifetime value

$1,600.00

gross margin over 20 months

Customer lifespan

20 months

$80.00 margin a month

Lifetime revenue

$2,000.00

before costs

LTV to CAC ratio

4.0 : 1

3:1 is a common rule of thumb

CAC payback

5.0 months

of gross margin to recover CAC

Highest CAC for 3:1

$533.33

one third of lifetime value

Everything stays on this device — your customer figures never leave your browser.

CLV calculator for subscriptions and repeat purchases

Customer lifetime value is the gross margin an average customer brings in before they leave. Choose the model that matches your business: monthly revenue and churn for subscriptions, or order value, order frequency and retention years for repeat purchases. The example account pays $100.00 a month at an 80% margin and churns at 5% a month, so it is worth $1,600.00 over a 20-month lifespan.

LTV to CAC ratio and payback

Lifetime value only means something against what the customer cost to win. Enter your CAC to get the LTV to CAC ratio (4.0:1 in the example) and the CAC payback period (5.0 months), plus the most you could spend per customer and still keep a 3:1 ratio.

Getting the churn rate right

Lifetime value is very sensitive to churn rate: halving churn doubles the lifespan and the value. Use the helper to turn “customers at the start” and “customers lost” into a percentage for the same period as your revenue figure, and press the button to use it.

Tracking customer value in a CRM

Accurate lifetime value needs clean customer and revenue records. Our CRM comparisons cover ecommerce, consultants and the full CRM section.

Frequently asked questions

How do I calculate customer lifetime value?
For a subscription, multiply average revenue per account per month by gross margin, then divide by monthly churn: $100.00 × 80% ÷ 5% = $1,600.00. The same churn implies an average customer lifespan of 1 ÷ 5% = 20 months. For repeat purchases, multiply average order value × orders per year × gross margin × years the customer stays. Both give an undiscounted estimate; they ignore upsells and the time value of money.
What is a good LTV to CAC ratio?
Divide lifetime value by what it costs to win a customer. A ratio of 3:1 is the rule of thumb most often quoted for healthy subscription businesses, and below 1:1 you lose money on every customer, but there is no universal threshold: capital-intensive and long-contract businesses accept different ratios. In the example $1,600.00 ÷ $400.00 = 4.0:1, and a CAC up to $533.33 would still give 3:1.
How do I calculate churn rate for CLV?
Churn rate is customers lost in a period divided by customers at the start of that period: 10 lost out of 200 is 5%. Use a rate for the same period as your revenue figure: monthly churn with monthly revenue. If you only know annual churn, divide it by 12 as a rough monthly figure, though compounding makes that slightly off. Enter your counts in the helper to see the percentage.
What is CAC payback period?
CAC payback is how many months of a customer’s gross margin it takes to earn back what you spent to acquire them: CAC ÷ gross margin per customer per month. With a $400.00 CAC and $80.00 of margin a month the payback is 5.0 months. A shorter payback recovers cash faster, which matters most when growth is funded from revenue rather than outside capital.
Should customer lifetime value use revenue or gross margin?
Gross margin. Revenue overstates what a customer is worth because it ignores the cost of serving them. The example customer brings in $2,000.00 of revenue over their lifespan but only $1,600.00 of gross margin, and the margin is what pays for acquisition. Use gross margin as a percentage of revenue after hosting, support and delivery costs; set it to 100 to see the revenue-based figure.
Is my customer data uploaded or processed on a server?
No. The calculation runs inside this page, everything you enter never leaves your browser, and there is no sign-up. Your inputs are saved only in this browser so they are still here when you return. That is enforced rather than promised: this site’s test suite scans the shipped HTML for every browser API capable of sending data off the page and fails the build if it finds one.