Customer Lifetime Value Calculator
Estimate customer lifetime value — the total revenue a customer brings over time.
What a customer is worth
Customer lifetime value estimates the total revenue a typical customer generates over the whole time they stay with you, not just their first purchase. This works it out from average value, purchase frequency and customer lifespan, a number that reframes how much a customer is really worth.
Enter the average value, frequency and lifespan to see the LTV.
Why LTV changes what you can spend
LTV matters most in relation to what it costs to acquire a customer. A business that only looks at the first sale will underspend on acquisition and marketing, because the real value of a customer who returns for years is far higher than that first transaction. Knowing your LTV tells you how much you can afford to spend to win a customer and still profit — the ratio of lifetime value to acquisition cost is one of the defining health metrics of a business, especially a subscription one. It also highlights the power of retention: extending how long customers stay, or how often they buy, raises LTV directly, often more cheaply than winning new customers.
Questions & answers
Why is lifetime value more useful than first-purchase value?
Because a returning customer's real worth spans years, so judging by the first sale alone leads a business to underspend on acquiring and keeping customers.
How does LTV relate to acquisition cost?
It sets how much you can afford to spend to win a customer and still profit. The ratio of LTV to acquisition cost is a key measure of business health.
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