Customer Lifetime Value Calculator (Free)
Customer Lifetime Value Calculator
Average Transaction Value
Enter the average amount a customer spends per transaction.
Average Transactions Per Year
Enter the average number of transactions a customer makes per year.
What is Lifetime Value (LTV) in simple terms?
LTV is the total revenue a business can expect from a single customer throughout their relationship. It’s not about how much they spend in one transaction but how much they contribute over time.
It’s a key metric because it shifts the focus from short-term wins to long-term profitability. Businesses that optimize for LTV think beyond just making a sale—they focus on retention, engagement, and increasing average spend.
Why does LTV even matter?
Because it dictates how much you can afford to spend on acquiring customers while staying profitable. If you don’t know your LTV, you’re flying blind in your marketing strategy.
More importantly, a high LTV often means your business has strong customer loyalty and a well-optimized sales funnel. It’s an indicator of sustainability, not just revenue.
How do I calculate LTV?
At its simplest: Average Purchase Value × Purchase Frequency × Customer Lifespan. But a more accurate model also considers profit margins and retention costs.
For subscription businesses, LTV is typically (ARPU ÷ Churn Rate), which reflects recurring revenue and customer stickiness.
What’s a good LTV?
There’s no universal benchmark, but a good rule is that LTV should be at least three times your Customer Acquisition Cost (CAC). If it’s lower, you’re likely overspending to acquire customers.
However, an excessively high LTV relative to CAC might suggest you're being too conservative with your growth investments—sometimes, spending more to scale faster is the right move.
What are some examples of LTV across different businesses?
LTV varies a lot depending on the business model, customer retention, and pricing strategy. Here’s a breakdown from the lowest to the highest.
| Business Type | Estimated LTV ($) | Why is the LTV at this level? |
|---|---|---|
| Fast Food (Single Visit) | 5 | Most customers buy once and don’t necessarily return to the same place. |
| Gas Station (Occasional Customer) | 50 | Customers stop by when they need fuel, but brand loyalty is weak. |
| Low-End E-commerce Store | 100 | Buyers often make one or two purchases but don’t build long-term habits. |
| Local Coffee Shop (Casual Customer) | 250 | Customers might come back, but competition is high, so retention is tricky. |
| Fast Food (Loyal Customer) | 500 | Some people eat at the same chain regularly, increasing their lifetime spend. |
| Gym Membership (Standard) | 800 | Monthly fees add up, but churn is high as many quit after a few months. |
| Streaming Subscription | 1,200 | People stay subscribed for a while, but eventually cancel when content changes. |
| Luxury E-commerce (Occasional Buyer) | 2,500 | Customers buy expensive items but only occasionally. |
| Casual Mobile Game (In-App Purchases) | 3,000 | A small percentage of players spend a lot over time. |
| High-End Coffee Shop (Daily Customer) | 5,000 | Regulars come in daily, and the price per cup adds up fast. |
| High-End E-commerce (Loyal Customer) | 7,500 | Repeat buyers invest in quality and stick to their favorite brands. |
| Premium Gym Membership | 10,000 | Long-term members pay high monthly fees and invest in extras like personal training. |
| B2B SaaS (Small Business Plan) | 15,000 | Software subscriptions retain users for years if the product is sticky. |
| University Degree | 30,000 | Education is a long-term investment with high upfront costs. |
| Luxury Car Dealership | 50,000 | High-ticket items sold every few years lead to big LTV. |
| Private Healthcare Membership | 75,000 | Patients stay for years, and medical services are costly. |
| Real Estate Brokerage | 100,000 | Few transactions, but commissions are huge. |
| Wealth Management Service | 200,000 | Clients keep their money in for decades, and fees accumulate. |
| Luxury Private Jet Charter | 500,000 | High-net-worth individuals use the service repeatedly. |
| Commercial Real Estate Client | 1,000,000 | Deals are rare but bring in massive commissions. |
| Luxury Yacht Dealer | 2,500,000 | Each customer buys only once or twice, but at a massive price. |
| Private Equity Firm | 10,000,000+ | Decades-long investments with high fees lead to enormous LTV. |
How can I increase my LTV?
It’s not just about keeping customers longer. You also want to increase their spending and engagement over time. This can be done through upselling, cross-selling, loyalty programs, or pricing strategies.
Another lever is customer experience—happy customers stay longer and spend more. Reducing friction, improving service, and deepening relationships all push LTV higher.