About

Customer Lifetime Value (LTV or CLV) is arguably the most vital metric in modern marketing and financial forecasting. It predicts the total revenue a business can reasonably expect from a single customer account throughout the business relationship. For SaaS, e-commerce, and subscription models, knowing your LTV is not optional—it is the ceiling for your Customer Acquisition Cost (CAC).

If you do not know your LTV, you are flying blind regarding how much you can spend on ads, sales commissions, and onboarding. A healthy business model typically targets an LTV:CAC ratio of 3:1. This calculator helps you determine your current standing and compares it against varied industry benchmarks, allowing you to identify if your churn is too high or your revenue per user (ARPU) is too low compared to market leaders.

Formulas

The standard formula for calculating LTV, assuming a consistent subscription model with a constant churn rate, is:

LTV = ARPUChurn

Where:

ARPU = Average Revenue Per User (Monthly)
Churn = Monthly Churn Rate (decimal, e.g., 0.05 for 5%)

For businesses with gross margin considerations, the advanced formula is:

LTV = (ARPU × GrossMarginChurn)

Reference Data

Industry Sector	Avg. Monthly Churn (%)	Avg. ARPU ($)	Avg. LTV ($)
SaaS (B2B Enterprise)	1.5%	$2,500	$166,000+
SaaS (B2B SMB)	4.5%	$85	$1,800
FinTech (Consumer)	6.2%	$15	$240
E-Commerce (Fashion)	8.0% (Repeat Rate)	$75 (AOV)	$250
Streaming Media (Video)	5.5%	$12	$218
Digital Publishing	7.1%	$9	$126
EdTech / E-Learning	9.0%	$30	$330
Health & Fitness Apps	10.5%	$18	$170
Box Subscriptions	11.0%	$40	$360
Gaming (Mobile)	85% (Day 30)	$5	$25

Frequently Asked Questions

The LTV:CAC ratio measures the relationship between the lifetime value of a customer and the cost of acquiring that customer. A ratio of 1:1 means you lose money (after operating costs). A ratio of 3:1 is considered the industry standard for a healthy business. A ratio of 5:1 or higher might suggest you are underinvesting in growth and could grow faster by spending more on marketing.

Churn is the denominator in the LTV equation, meaning it has an exponential impact. Reducing churn by just 1% can often increase LTV significantly more than increasing price (ARPU) by 1%. High churn indicates a 'leaky bucket' problem that makes sustainable growth mathematically impossible.

For accurate financial planning, always use Net LTV (factoring in Gross Margin). Gross LTV tells you the top-line revenue, but if your cost of goods sold (COGS) or service delivery costs are high (e.g., 50%), your 'real' money available for acquisition is half of the Gross LTV.

For e-commerce or transactional businesses, calculate LTV using: (Average Order Value) × (Purchase Frequency per Year) × (Average Customer Lifespan in Years). The calculator above allows you to approximate this by converting purchase frequency into a monthly average revenue.