Customer Lifetime Value (LTV) Calculator
Calculate customer lifetime value (LTV) instantly. Includes gross margin adjustment and LTV:CAC ratio analysis.
Average spend per transaction
How many times per year do they buy?
How many years does a customer stay?
Calculates margin-adjusted LTV
LTV Formula and Calculation Method
Customer Lifetime Value (LTV) is the cornerstone of strategic marketing decisions. There are two main calculation methods:
Basic LTV Formula
LTV = AOV × Satın Alma Sıklığı × Müşteri Ömrü
Example: AOV = $150, Annual Frequency = 4, Lifespan = 3 years → LTV = $150 × 4 × 3 = $1,800
Margin-Adjusted LTV Formula
LTV = AOV × Sıklık × Ömür × (Kar Marjı / 100)
Shows actual profitability. With 60% margin and $1,800 LTV → Adjusted LTV = $1,080
LTV and LTV:CAC Ratios by Industry
Compare your LTV value against industry averages and the ideal LTV:CAC ratio:
| Industry | Typical LTV | Typical CAC | LTV:CAC |
|---|---|---|---|
| SaaS (Enterprise) | $50,000+ | $10,000-20,000 | 3-5x |
| SaaS (SMB) | $2,000-10,000 | $300-1,500 | 3-5x |
| Finance & Insurance | $3,000-8,000 | $500-1,500 | 3-6x |
| E-commerce (Electronics) | $500-1,500 | $50-150 | 4-8x |
| E-commerce (Fashion) | $200-600 | $20-60 | 4-8x |
| Restaurant / Cafe | $1,000-2,500 | $10-30 | 40-100x |
* LTV values shown in USD for global markets. Adjust for local currency as needed.
Why Is LTV a Strategic Metric?
Marketing and growth decisions made without knowing LTV are like flying blind. LTV's strategic importance shows up in these areas:
- Ad budget decisions: Knowing your LTV, you can calculate the maximum CAC you can afford per channel. For example, if LTV is $900, you can grow profitably at $300 CAC.
- Customer segmentation: Understanding which customer groups generate higher LTV lets you focus on high-value segments.
- Product and pricing decisions: Analyzing which products or price points generate the highest LTV lets you optimize your portfolio.
- Investor presentations: The LTV:CAC ratio is one of the metrics most scrutinized by investors for growth-stage companies.
Key Considerations in LTV Calculation
LTV estimates must be realistic. Common mistakes and how to avoid them:
Mistake: Overestimating customer lifespan
Solution: Use churn rate: Lifespan = 1 / Churn Rate. 50% annual churn = 2 years lifespan.
Mistake: Averaging all customers
Solution: Calculate LTV by segment. Your top 20% customers have a much higher LTV.
Mistake: Not including gross margin
Solution: Use margin-adjusted LTV, not revenue-based. Otherwise you can't see losses.
Mistake: Counting first purchase as LTV
Solution: First purchase is not LTV; don't estimate LTV without repeat purchase and retention data.