LTV Calculator
Lifetime value is the total gross profit a single customer brings before they move on. Once it is a number, marketing stops being a cost you hope works and becomes a figure you can bid against — you know what a customer is worth and therefore what you may spend to win one. This calculator builds the estimate from buying habits and margin, and compares it with your acquisition cost when you supply one.
Enter values
Results
- Customer lifetime value
- ₹14,400.00
- Revenue per customer
- ₹36,000.00
- LTV to CAC ratio
- 3.6×
- Purchases over their lifespan
- 18
How is the LTV calculated?
Enter what an average purchase is worth, how many purchases a customer makes in a year, and how many years they typically stay; those three multiply into revenue per customer. Apply the gross margin percentage — the share of sales left after the direct cost of what you sold — to convert revenue into the value that actually matters. Add your acquisition cost and the LTV:CAC ratio appears beside it.
Formula
Revenue per customer = Average purchase value × Purchases per year × Lifespan in years. LTV = Revenue per customer × Gross margin %. Gross margin is the percentage of sales left after the cost of goods, which keeps the answer honest: ₹36,000 of spending at 40% margin is worth ₹14,400. LTV:CAC = LTV ÷ Acquisition cost.
Example
A tutoring service charges ₹2,000 per session, a family books 6 sessions a year, and families stay about 3 years. Revenue per customer = 2,000 × 6 × 3 = ₹36,000. After tutor fees and materials the gross margin is 40%, so LTV = 36,000 × 0.40 = ₹14,400. The service spends ₹4,000 to win each family, giving LTV ÷ CAC = 14,400 ÷ 4,000 = 3.6 times, comfortably above the usual 3× benchmark.
Things to remember
Treat the result as a direction rather than a promise: lifespans and margins drift, and a discount granted on every purchase quietly shrinks the gross margin you entered. Revisit the calculation each quarter, and when the ratio sits below 3, improve retention or find a cheaper channel before raising the budget.
Frequently Asked Questions
What is a good LTV to CAC ratio?
Three to one is the benchmark most teams use: lifetime gross profit at least three times what you paid to win the customer. Below 1× you lose money on every acquisition, 1–2× leaves little room for error, and above 5× may simply mean you are under-investing in growth.
Should LTV be based on revenue or profit?
Use profit, or revenue multiplied by gross margin. Sales-based LTV flatters thin-margin businesses: ₹36,000 of spending at 40% gross margin is worth ₹14,400, while the same sales at 10% margin are worth only ₹3,600 to the business.
How many years should I use for customer lifespan?
Use measured retention when you have it: divide your active customer base by the number lost each year to get an average lifespan. Without history, start conservatively at two or three years, then replace the estimate with real figures from the churn rate calculator.
Does lifetime value include overheads and tax?
No — gross margin already removes the direct cost of what you sold, while overheads, interest and tax sit below that line. For a valuation-grade figure, start from EBITDA instead and keep this LTV as the customer-level cross-check.
Related Calculators
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