Finance & Strategy
Customer Lifetime Value (LTV)
The total revenue a customer is worth.
Calculate customer lifetime value using average order value, purchase frequency, gross margin, and customer lifespan. LTV is the foundation for pricing, CAC budgets, and retention investment.
Inputs
Adjust to model your scenario
$250
$
4
65%
%
3.5
LTV (gross profit)
$2,275
Each customer generates $2,275 in gross profit over their 3.5-year lifespan. Use this as your maximum sustainable CAC ceiling.
LTV (revenue)
$3,500
Annual gross profit per customer
$650
Formula
LTV = AOV × Purchase frequency × Gross margin × Customer lifespan
Benchmarks
< 1× CACLosing money
1–3× CACRecovering — but tight
3–5× CACHealthy SaaS / DTC benchmark
> 5× CACElite — invest more in acquisition
FAQ
How operators use this calculator.
Use gross profit LTV for acquisition decisions and unit economics. Revenue LTV is useful for top-line forecasting only.
Related tools
Tools operators run alongside this one.
Finance & Strategy
Customer Acquisition Cost (CAC)
The true cost of acquiring one new customer.
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LTV:CAC Ratio
The single most important unit-economics metric.
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CAC Payback Period
How fast you recover what you spent to win a customer.
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Churn Rate Calculator
The silent killer of compounding revenue.
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Need more than the math?
Get the SAZ team running this for your business.
Email info@Sedighi.ca or call (604) 632-4959. A senior partner responds within one business day.
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