Customer economics

LTV Calculator (Customer Lifetime Value)

Calculate customer lifetime value, LTV:CAC ratio and acquisition payback. Compare simple, retention and NPV scenarios.

  • LTV + LTV:CAC
  • Scenario comparison
  • Local calculations
Verified July 14, 2026 · formulas and limitations

Simple LTV uses AOV × frequency × lifespan. The retention model assumes an annual retention rate and computes LTV as annualRevenue / annualChurnRate. NPV discounts annual profit and prorates a fractional final year - it is not a substitute for cohort analysis.

What is LTV and why does it matter?

LTV (Lifetime Value) is the total value a customer will bring to your business over the entire relationship.

Basic formula: LTV = AOV × Purchase frequency × Customer lifetime
Example: 200 × 4 purchases/year × 3 years = 2,400 LTV
Why is LTV critical?
  • Marketing budget: You know how much you can spend to acquire a customer (CAC)
  • Segmentation: You identify your most valuable customers
  • Retention vs Acquisition: You make better decisions about budget allocation
  • Business valuation: LTV is a key metric for investors

Calculate LTV in 4 steps

1 Enter the average order value
2 Provide the purchase frequency
3 Specify the customer lifetime
4 Add margin (optional)
Purchase data
Revenue / Number of orders
Margin and costs
For NPV – time value of money (0 = no discounting)

Customer lifetime value

-
LTV (revenue)
Total revenue from customer
-
LTV (profit)
After margin
-
LTV (NPV)
Net present value
Annual customer value -
Number of transactions (lifetime) -
Annual profit per customer -
Max CAC (for LTV:CAC = 3:1) -
LTV breakdown over time

Retention model calculates LTV based on customer retention rate. It is more accurate when you have churn data.

Retention data
PLN
% customers who make a purchase in the next year
Retention model results
-
LTV (revenue)
AOV × Freq ÷ (Churn % ÷ 100)
-
LTV (profit)
LTV × Marża % ÷ 100
-
Average customer lifetime
100 ÷ Churn %
-
Churn rate
100% - Retention
Cohort simulation (1,000 customers)

See how the number of active customers changes over time

LTV:CAC is the most important marketing efficiency metric. It shows how much you earn for each unit spent on customer acquisition.

Acquisition costs
PLN
Użyj wartości z zakładki "Prosty LTV" lub "Model retencji"
PLN
Marketing spend / Number of new customers
PLN
Used to calculate payback period
LTV:CAC analysis
-
LTV:CAC
-
Payback period -
ROI per customer -
Net profit per customer -
Where are you on the LTV:CAC scale?
<1
1-2
2-3
3-5
5+
Loss
Risk
OK
Good
Excellent

Compare scenarios and see how AOV, customer lifespan, purchase frequency or margin affect LTV.

Scenarios to compare
Current Current state
-
LTV (profit)
+AOV Higher basket
-
LTV (profit)
-
+Lifespan Longer customer relationship
-
LTV (profit)
-
+Freq More frequent purchases
-
LTV (profit)
-
Scenario comparison

LTV formulas

Model Formula When to use
Simple LTV AOV × Freq × Lifespan When you know average customer lifetime
Retention model AOV × Freq ÷ (Churn % ÷ 100) When you have churn/retention data
LTV (profit) LTV × Marża% For actual economic value
LTV (NPV) Σ (Zysk_t / (1+r)^t) When you want to account for time value of money

LTV:CAC benchmarks

< 1:1
Loss – You spend more on acquisition than the customer brings in
1:1 - 2:1
Risk – Minimal profitability, no margin for fixed costs
2:1 - 3:1
OK – Acceptable for young companies, but room for optimization
3:1 - 5:1
Good – Healthy business, optimal balance of growth and profitability
> 5:1
Excellent – But may mean underinvestment in marketing (missing growth)

Formulas and methodology

LTV (simple)AOV × frequency × lifespan
LTV (retention)annualRevenue / (1 - retentionRate)
LTV:CACltvProfit / cac
paybackMonths(cac / annualProfit) × 12

Original editorial calculator. Results are computed locally. Last verified: July 14, 2026.

How to increase LTV?

Increase AOV
  • Upselling and cross-selling
  • Bundles / product sets
  • Free shipping threshold
  • Product recommendations
Increase frequency
  • Email marketing
  • Loyalty program
  • Remarketing
  • Subscriptions
Increase retention
  • Customer service
  • Personalization
  • VIP programs
  • Proactive outreach
Increase margin
  • Supplier negotiations
  • Private label
  • Logistics optimization
  • Premium pricing