Free LTV / CLV Calculator

Customer Lifetime Value Calculator

Calculate your LTV using the SaaS method (ARPU ÷ churn rate) or the general method. Optionally enter your CAC to see your LTV:CAC ratio.

ARPU (per month)

Average Revenue Per User per month

Monthly Churn Rate

% of customers who cancel per month

Gross Margin % (optional - for margin-adjusted LTV)

Customer Acquisition Cost / CAC (optional - to calculate LTV:CAC ratio)

Enter your inputs above to calculate customer lifetime value

LTV:CAC Ratio Benchmarks

≥ 5:1

May be under-investing

Very efficient, but consider investing more in growth - you may be leaving market share on the table.

3:1

Healthy (target)

The standard SaaS benchmark. For every $1 acquiring a customer, you earn $3+ in lifetime value.

2:1

Acceptable

Positive unit economics. Improve LTV through churn reduction or pricing optimization.

1–2:1

At risk

Thin margins. Not enough cushion for unexpected churn or CAC increases.

< 1:1

Unsustainable

Losing money on every customer acquired. Fix churn or reduce CAC before scaling.

Related Tools & Resources

Churn Rate Calculator

Calculate the churn rate that feeds your LTV formula

MRR Calculator

Calculate MRR to find your ARPU across pricing plans

Rule of 40 Calculator

Check your overall SaaS health score

PMF Calculator

Low LTV often traces back to a PMF problem - measure it here

What is Customer Lifetime Value (LTV)?

Customer Lifetime Value (LTV or CLV) is the total revenue you can expect from a single customer over the entire duration of their relationship with your company. For SaaS businesses, it is one of the most important metrics because it determines how much you can afford to spend acquiring a new customer.

The relationship between LTV and CAC (Customer Acquisition Cost) defines the economics of your growth model. A 3:1 LTV:CAC ratio is the standard SaaS benchmark - it means you earn three dollars over a customer's lifetime for every dollar you spent to acquire them. Below 1:1 means you're subsidizing every customer you acquire with investor capital.

LTV Formulas

SaaS Method (recommended)

LTV = ARPU ÷ Monthly Churn Rate

For gross-margin-adjusted LTV: LTV = (ARPU × Gross Margin %) ÷ Monthly Churn Rate

General Method

LTV = Avg Order Value × Purchase Frequency × Customer Lifespan

Frequently Asked Questions

What is the difference between LTV and CLV?

LTV (Lifetime Value) and CLV (Customer Lifetime Value) refer to the same metric. LTV is the shorthand used more commonly in SaaS; CLV is used more in e-commerce and retail. Both measure the total expected revenue from a customer over their relationship with your company.

How does churn rate affect LTV?

Churn rate has a dramatic, exponential impact on LTV. At 2% monthly churn, average customer lifespan = 50 months. At 5%, it's 20 months. At 10%, only 10 months. Reducing churn from 5% to 2% increases LTV by 150% - far more leverage than raising prices by the same relative amount.

Should I use gross-margin-adjusted LTV?

For investor conversations, yes. Gross-margin-adjusted LTV = (ARPU × Gross Margin %) / Monthly Churn Rate. This removes infrastructure costs (hosting, support) from the calculation, giving a more accurate picture of the actual value created per customer. Use it consistently - don't switch formulas when presenting to different audiences.

What is a good LTV:CAC ratio for SaaS?

The 3:1 ratio is the standard SaaS benchmark - for every $1 in acquisition cost, you earn $3+ in lifetime value. Above 5:1 may mean you're under-investing in growth. Below 1:1 means the business model doesn't work at scale without continuous capital injection.

How do I increase LTV?

The highest-leverage levers: (1) Reduce churn - even 1 percentage point of monthly churn reduction has a compounding effect on LTV. (2) Increase ARPU through pricing optimization or upsells. (3) Add expansion paths (seat-based pricing, usage-based billing). (4) Improve gross margin by reducing COGS. Churn reduction typically has the most leverage in early-stage SaaS.