Customer Lifetime Value (LTV/CLV) is the total revenue or profit you expect from a customer over their entire relationship with your business.

What is a good LTV:CAC ratio?

3:1 or higher is considered healthy — each customer should be worth at least 3x what they cost to acquire.

How do I reduce churn to increase LTV?

Improve onboarding, customer support, product value, engagement, and regularly collect feedback. Even a 1% reduction in churn can significantly increase LTV.

LTV Calculator

Calculate Customer Lifetime Value — the total revenue a customer generates over their entire relationship with your business. Critical for pricing, budgeting, and growth planning.

What Is Customer Lifetime Value?

Customer Lifetime Value (LTV or CLV) estimates the total revenue or profit a single customer generates over their entire relationship with your business. It is one of the most important metrics for SaaS, e-commerce, and subscription companies because it determines how much you can afford to spend on acquisition, which customer segments are most valuable, and whether your business model is sustainable long-term.

LTV Formulas

Simple LTV = ARPU × Average Customer Lifespan (months)

LTV with Margin = ARPU × Gross Margin % × Lifespan

LTV from Churn = ARPU × Gross Margin / Monthly Churn Rate

Average Lifespan = 1 / Monthly Churn Rate

The LTV to CAC Ratio

The LTV:CAC ratio compares what a customer is worth against what it costs to acquire them. A ratio of 3:1 or higher is considered healthy, meaning each customer generates three times their acquisition cost. Below 1:1 means you are losing money on every customer. This ratio guides marketing budget allocation, channel prioritization, and pricing decisions. Improving retention even slightly can dramatically shift this ratio in your favor.

How to Increase LTV

There are three levers for increasing LTV: raise average revenue per user through upsells and price increases, improve gross margin by reducing cost of delivery, or extend customer lifespan by reducing churn. The most effective approach is reducing churn, because even a 1% improvement in monthly retention compounds over the entire customer relationship. Strong onboarding, proactive customer success, and continuous product improvement all contribute to higher LTV.