Calculate customer lifetime value
Order value, frequency, lifespan, and margin turned into one number.
Use the free LTV calculator to estimate how much a customer is worth over the whole relationship — no signup, and results update as you type. LTV sets the ceiling for acquisition cost, so the estimate should reflect margin and retention before it changes bids or budgets.
Order value times frequency, margin, and retention.
Decide how much a new customer is worth paying for.
Averages hide how differently channels and cohorts behave.
LTV sets the ceiling for acquisition cost
A CAC that looks expensive against first-purchase revenue can be cheap against lifetime value, and the reverse is just as common. Enter average order value, purchase frequency, and customer lifespan; the calculator returns LTV, value per month, and — once CAC is added — the LTV:CAC ratio. Then compare that ratio per channel before deciding where spend should grow.
Read LTV through cohorts and payback
An average LTV blends mature cohorts with customers acquired last week. Before scaling on an LTV assumption, check how quickly value actually arrives: a strong 24-month LTV does not help if the budget needs payback in three. Cohort curves and payback windows turn the estimate into a usable constraint.
Enter Your Numbers
LTV Formula
Customer Lifetime Value (LTV) estimates how much a customer is worth over the whole relationship, not just the first purchase. Adding gross margin turns the revenue estimate into a value estimate you can compare directly against acquisition cost.
Example: A customer who spends $45 per order, buys 1.5 times a month, stays for 12 months at a 60% margin is worth $486 (45 × 1.5 × 12 × 0.6). With a $30 CAC, the LTV:CAC ratio is 16:1.
LTV:CAC Benchmarks by Industry
| Industry | Target LTV:CAC | Your Status |
|---|---|---|
| ☁️SaaS / Subscriptions | 3.0:1 | |
| 🛒E-commerce | 2.5:1 | |
| 🎮Mobile Apps & Gaming | 2.0:1 | |
| 💳Fintech | 3.5:1 | |
| 🏪Marketplaces | 2.5:1 | |
| 📦D2C Brands | 2.2:1 |
* Benchmarks are industry averages and may vary by business model, margin profile, and payback requirements.
How to Improve Your LTV
Common questions about this workflow.
What is LTV?
LTV, or customer lifetime value, is the total value a customer generates over the whole relationship. It is estimated from average order value, purchase frequency, customer lifespan, and gross margin.
How do you calculate LTV?
LTV = average order value × purchases per month × customer lifespan in months × gross margin. A customer spending $45 per order, 1.5 times a month, for 12 months at 60% margin is worth $486.
What is a good LTV:CAC ratio?
A ratio of 3:1 or higher is the common benchmark. Below 1:1 acquisition loses money, while a very high ratio can mean the business is underinvesting in growth.
How do I calculate my current LTV?
Enter your average order value, purchases per month, and customer lifespan into the calculator. Add gross margin to get a margin-adjusted value, and add CAC to see the LTV:CAC ratio. Results update as you type — there is no submit button.
Why include gross margin in the LTV calculation?
Margin turns a revenue estimate into a value estimate. Without it, LTV overstates what a customer is actually worth, and comparing revenue-based LTV against CAC makes unprofitable acquisition look healthy.
Is the LTV calculator free?
Yes. The calculator is free, runs in the browser, and does not require signup. It is designed for quick checks — deeper cohort and payback analysis still needs your own revenue data.
Move from LTV math to LTV-driven buying.
AdBid connects lifetime value context to campaigns, budgets, and creative decisions so acquisition is judged on the value it returns.