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Customer Lifetime Value Calculator

Work out what a customer is worth in gross profit, then see how that compares to what it costs to win one.

Example numbers are filled in. Replace them with yours.

Lifetime value (gross profit)$1,200
Revenue per year
$1,000
Lifetime revenue
$3,000
Gross margin (40%)
$1,200
Customer lifetime value (gross profit)
$1,200
Cost to acquire a customer
$500
LTV to CAC
2.4 : 1
Months to earn back CAC
15.0

Each customer returns 2.4× what it costs to win them. That's the number that tells you how much you can spend on prospecting.

How the lifetime value calculator works

Pick the model that matches how your customers pay. Repeat purchases multiplies order value, purchase frequency and years, then applies your gross margin. Subscription divides monthly gross profit per customer by monthly churn. Add your cost to acquire a customer to see LTV to CAC and how many months it takes to earn that cost back.

Why salespeople should know this number

Lifetime value tells you what a customer is worth, which tells you how hard to fight for one and how much a discount really costs. Before you cut price to close, read why you discount even when you believe your price is fair.

Frequently asked questions

How do you calculate customer lifetime value?

For repeat purchases: average order value × purchases per year × years as a customer × gross margin. For a subscription: monthly revenue per customer × gross margin ÷ monthly churn rate. Both give lifetime value in gross profit, which is what you can actually spend to win a customer.

Why use gross profit instead of revenue?

Revenue includes the cost of delivering what you sold. Gross profit is what's left to pay for sales, marketing and everything else, so it's the honest ceiling on what a customer is worth to acquire.

What is LTV to CAC?

Lifetime value divided by the cost to acquire a customer. A ratio of 3 : 1 means each customer returns three times what you spent to win them. A ratio near or below 1 means you lose money on every new customer.

How does churn affect lifetime value?

Average lifetime in months is 1 ÷ monthly churn. At 3% monthly churn the average customer stays about 33 months; at 6% it drops to about 17. Halving churn roughly doubles lifetime value.

Is this a forecast?

No. It's a simple average based on the numbers you enter. Real customers vary, so use it to compare scenarios and set limits, not as a guarantee.

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