Free LTV Calculator (Customer Lifetime Value)
Estimate revenue and gross-contribution customer lifetime value using purchase frequency, lifespan or monthly churn. Use advanced options and copy or download your results. Browser-based and no signup required.
Loading tool…
How to use the ltv (customer lifetime value) calculator
Estimate revenue and gross-contribution customer lifetime value using purchase frequency, lifespan or monthly churn. No signup required.
- Enter average order value and purchases per customer per year.
- Choose a known customer lifespan in years or an illustrative estimate from monthly customer churn.
- Enter gross contribution margin and customer acquisition cost to compare revenue LTV, contribution LTV and LTV/CAC.
- Review the assumptions and copy or download the scenario; treat it as an estimate rather than guaranteed future revenue.
When an LTV estimate helps
Customer lifetime value estimates how much a typical customer is worth over the whole relationship. A store owner can use it to decide how much to spend on ads for a new customer. A subscription business can use it to see whether a price change or a drop in churn makes a real difference.
It is also a useful sense check before a planning meeting or investor update. Putting LTV next to customer acquisition cost shows whether growth is paying for itself. Treat the output as a planning estimate, and talk to a finance professional before making major spending decisions based on it.
Worked example using monthly churn
Say your average order value is 60.00 and a customer buys 4 times a year. You do not know the average lifespan, but monthly customer churn is 2.5 percent. Gross contribution margin is 45 percent, and it costs 120.00 to acquire a customer.
The estimated lifespan is 1 divided by 0.025, which is 40 months, then divided by 12, which is about 3.33 years. Revenue LTV is 60 times 4 times 3.33, which equals 800.00. Contribution LTV is 800 times 45 percent, which is 360.00.
Contribution after acquisition is 360 minus 120, or 240.00. The contribution LTV to CAC ratio is 360 divided by 120, which is 3.0. If churn rose to 5 percent, lifespan would fall to about 1.67 years and every LTV figure would halve.
Reading the results
Revenue LTV is the total amount a customer is expected to spend. Contribution LTV is what remains after product and delivery costs covered by your gross margin. Contribution after acquisition subtracts the cost of winning the customer. These three numbers answer different questions, so do not swap them.
The LTV to CAC ratio compares contribution LTV with acquisition cost. A ratio above 1 means contribution covers acquisition cost in this simple model. Many teams aim higher to leave room for overhead, but the right target depends on your business and cash position.
The churn method assumes a steady churn rate. If churn is zero, the calculator shows the lifespan as undefined rather than infinite.
Common mistakes to avoid
The most common error is entering purchases per month in the yearly field. The frequency field is always annual, even when you choose the monthly churn method. A customer who buys every month should be entered as 12.
Another mistake is comparing revenue LTV with CAC. That makes acquisition look much cheaper than it is, because product costs are ignored. Use contribution LTV for that comparison. Also avoid using an average that mixes very different customer groups, such as wholesale and retail buyers. Run each group separately for a clearer picture.
Useful tips and limitations
- Purchase frequency must be annual even when the lifespan is estimated from monthly churn.
- Revenue LTV and contribution LTV are different. Retention costs, discounting and changing behavior are not modeled.
- Use churn and order data from the same period and customer group to keep the estimate consistent.
- Try a pessimistic and an optimistic churn rate to see how sensitive your LTV is before relying on one figure.
Common questions
How is customer lifespan estimated from monthly churn?
The simple churn model uses one divided by monthly customer churn to estimate months, then divides by 12 for years. It assumes constant churn in a subscription-like population.
Why is contribution LTV lower than revenue LTV?
Contribution LTV multiplies revenue LTV by the entered gross margin. It estimates contribution after product costs before subtracting acquisition cost.
Does zero monthly churn create a reliable infinite lifetime value?
No. This simple model has no finite lifespan at zero churn, so the calculator shows an undefined result rather than claiming infinite value.
Should I enter monthly or yearly purchase frequency?
Always yearly. If customers buy once a month, enter 12 purchases per year, even when you estimate lifespan from monthly churn.
Does the calculator discount future revenue?
No. It does not apply a discount rate, so money earned in later years counts the same as money earned today.
What is a good LTV to CAC ratio?
There is no single correct number. A ratio above 1 means contribution covers acquisition in this model, but overhead, cash flow and payback time also matter.
Your input is processed in your browser without a ToolWorld Online account. Copy or download anything you want to keep before leaving the page.