Finance

LTV Calculator

Calculate customer lifetime value and acquisition costs

Calculator

Overview

The LTV Calculator helps determine the total value a customer brings to your business over their entire relationship.

Knowing customer LTV helps optimize acquisition costs, improve targeting, and maximize marketing ROI.

Input average purchase value, frequency, and customer lifespan to calculate lifetime value and analyze profitability.

How It Works

Formula

LTV = Average Purchase Value × Purchase Frequency × Average Customer Lifespan

Variables

Average Purchase Value: Average amount spent per purchase
Purchase Frequency: Number of purchases in a given period
Customer Lifespan: Average duration of customer relationship

Best Practices

Segment customers
Include all revenue
Consider costs
Update regularly
Track trends
Compare segments
Account for churn

Frequently Asked Questions

How do I increase customer LTV?

Increase LTV by improving customer retention, encouraging repeat purchases, offering complementary products, providing excellent service, and maintaining engagement through valuable content.

What's more important, LTV or CAC?

Both metrics are crucial and should be analyzed together. The LTV:CAC ratio should ideally be 3:1 or higher for a sustainable business model.

How often should I calculate LTV?

Calculate LTV quarterly for established businesses, monthly for growing businesses. Update calculations when significant changes occur in customer behavior or business model.