Calculate the total revenue expected from a customer over their lifetime. Understand your LTV to optimize acquisition spend and drive sustainable growth.
Calculate the total revenue expected from a customer over their lifetime. Understand your LTV to optimize acquisition spend and drive sustainable growth.
Generated: 1/13/2026, 7:18:43 AM | AskSMB.io
Average revenue per purchase
Average number of purchases per customer per year
Average number of years a customer stays active
All values must be greater than zero
Customer Lifetime Value (LTV)
$0.00
Annual Customer Value
$0.00
Growth Readiness Indicator
Please enter valid positive values
For sustainable growth, your LTV should be at least 3x your Customer Acquisition Cost (CAC).
• 3:1 or higher: Healthy, scalable growth
• 1:1 to 3:1: Risky, optimize retention or reduce CAC
• Below 1:1: Unprofitable, urgent action needed
Customer Lifetime Value (LTV or CLV) is a metric that represents the total revenue a business can reasonably expect from a single customer account throughout the business relationship. It's one of the most important metrics for understanding the long-term value of your customer base and making informed decisions about marketing spend, customer service investments, and growth strategies.
Understanding your LTV is critical for sustainable business growth. It tells you:
Without knowing your LTV, you're flying blind on critical business decisions and may overspend or underspend on growth initiatives.
The LTV to CAC ratio is perhaps the most important metric for evaluating business health and scalability:
A healthy ratio is 3:1 or higher. This means for every dollar you spend acquiring a customer, you earn three dollars back over their lifetime. Ratios below 1:1 indicate you're losing money on each customer acquired.
There's no universal "good" LTV—it depends on your industry, business model, and CAC. However, general guidelines include:
More important than the absolute number is ensuring your LTV is at least 3x your CAC, allowing for profitable scaling.
You can improve LTV by influencing any of the three components in the calculation:
1. Increase Average Order Value:
2. Increase Purchase Frequency:
3. Extend Customer Lifespan:
Example: Online Subscription Box Service
Average order value: $50
Purchase frequency: 4 per year (quarterly subscription)
Customer lifespan: 3 years
Annual customer value: $50 × 4 = $200
Customer lifetime value: $200 × 3 = $600
With a $600 LTV, this business could spend up to $200 per customer on acquisition (3:1 ratio) while maintaining healthy unit economics.