LTV Calculator — Customer Lifetime Value Made Simple
Calculate customer lifetime value (LTV or CLV) to understand how much each customer is really worth to your business long-term.
Most businesses obsess over acquiring customers and underinvest in keeping them. Lifetime value (LTV) is the number that ties acquisition cost, retention, and revenue together — and tells you whether your business model actually works. Use the CalcHub LTV Calculator to find out what your average customer is genuinely worth.
The Core Formula
LTV = Average Purchase Value × Purchase Frequency × Customer LifespanOr for SaaS/subscription businesses:
LTV = Average Monthly Revenue per Customer / Monthly Churn RateA subscription product charging ₹999/month with 2% monthly churn has:
LTV = ₹999 / 0.02 = ₹49,950 per customer
How to Use the Calculator
- Average revenue per customer per month (or per transaction for non-subscription)
- Purchase frequency — how often do they buy in a year (for transactional businesses)
- Average customer lifespan — how many years customers typically stay
- Gross margin % — optional but important for profit-adjusted LTV
LTV Models by Business Type
| Business Type | Typical LTV Formula | Example |
|---|---|---|
| SaaS | ARPU / Churn Rate | ₹2,000/mo ÷ 3% churn = ₹66,667 |
| E-commerce | AOV × Orders/year × Avg. years | ₹1,500 × 4 × 3 = ₹18,000 |
| Services/agency | Monthly retainer × Avg. months | ₹50,000 × 18 = ₹9,00,000 |
| Mobile app | ARPU × Avg. session months | ₹120 × 14 = ₹1,680 |
Why Gross-Margin LTV Matters
Nominal LTV counts all revenue. But if you have 60% gross margins, only 60% of that revenue is real value you can deploy. A customer worth ₹50,000 in revenue with 40% margins is really worth ₹20,000 in gross profit — and that's the number your CAC should be compared against.
Rule of thumb: LTV:CAC ratio should be at least 3:1. If you're spending ₹10,000 to acquire a customer with ₹20,000 gross-profit LTV, the ratio is 2:1 — you're technically growing but not efficiently.Improving LTV Without Acquiring New Customers
- Reduce churn — even a 1% drop in monthly churn dramatically increases LTV. Going from 3% to 2% monthly churn increases LTV by 50%.
- Expand revenue — upsells, add-ons, and tier upgrades raise average revenue per customer
- Improve onboarding — customers who get value in the first 30 days stick around longer
- Net Promoter feedback loops — fix what's making customers leave before they leave
What's the difference between LTV and CLV?
They're the same metric — Customer Lifetime Value (CLV) and Lifetime Value (LTV) are used interchangeably. Some companies use LTV for the forward-looking calculation and CLV for historically measured cohorts, but there's no universal standard.
Should I use gross-margin LTV or revenue LTV?
For internal decisions and unit economics, always use gross-margin LTV. Revenue LTV overstates the economic value of a customer if your margins are thin. When presenting to investors, show both — they'll ask about gross margin anyway.
How does churn affect LTV in SaaS?
Dramatically. Here's the math: if monthly churn goes from 5% to 2%, and ARPU is ₹1,000/month, LTV goes from ₹20,000 to ₹50,000. Reducing churn is often more valuable than increasing prices or adding users.