How to Use the Customer Lifetime Value (LTV / CLV) Calculator
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1
Select business model: E-commerce (Order Value & Frequency) or SaaS Subscription (Monthly ARPU & Churn Rate).
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2
Enter financial parameters: Average Revenue Per User, Gross Margin %, and Customer Churn Rate % (or lifespan in years).
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3
Optionally enter Customer Acquisition Cost (CAC).
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4
Review computed LTV, Net Profit per Customer, and the LTV:CAC health ratio (ideal > 3:1).
Practical Example & Use Case
Common Real-World Scenario
A SaaS business with $50/mo ARPU, 80% gross margin, and 2.5% monthly churn calculates a customer LTV of $1,600 and a 4:1 ratio against a $400 CAC.
Technical Notes & Limitations
Browser Engine Architecture
Formulas model steady-state churn and margin economics.
Frequently Asked Questions
What is a healthy LTV:CAC ratio for startups?
A ratio of 3:1 or higher is standard for healthy, scalable business growth. A ratio below 1:1 indicates you lose money on every customer acquired.