Free Customer Lifetime Value Calculator
Calculate your Customer Lifetime Value (LTV) using simple or churn-based formulas. Understand your unit economics, compare against B2B SaaS benchmarks, and get actionable recommendations to increase customer value and retention.
Two LTV Formulas
Calculate using lifespan-based or churn-based methods with optional segment comparison
LTV:CAC Analysis
Add your CAC to see your LTV:CAC ratio and months to recoup acquisition cost
Actionable Insights
Get tailored recommendations to increase LTV through better retention and expansion
How it works
Understanding Customer Lifetime Value
Master the metric that determines sustainable B2B growth
What is LTV and why does it matter?
Customer Lifetime Value (LTV) is the total revenue a business can expect from a single customer account over the entire relationship. It is one of the most important metrics for B2B SaaS companies because it sets the ceiling for how much you can profitably spend to acquire a customer. When paired with Customer Acquisition Cost (CAC), LTV reveals whether your growth model is sustainable. Companies with high LTV relative to CAC can invest aggressively in growth while maintaining healthy margins.
The LTV formulas
Simple LTV = Monthly ARPA x Gross Margin % x Average Customer Lifespan (months)
Churn-based LTV = Monthly ARPA x Gross Margin % / Monthly Churn Rate
LTV:CAC Ratio = Customer Lifetime Value / Customer Acquisition Cost
CAC Payback Period = CAC / (Monthly ARPA x Gross Margin %)
How to increase LTV
- -Reduce churn by investing in customer success, onboarding, and proactive health monitoring
- -Increase ARPA through upsells, cross-sells, and usage-based pricing tiers that grow with customers
- -Improve gross margin by automating delivery, reducing support costs, and optimising infrastructure
- -Build switching costs through deep integrations, workflows, and data that make your product indispensable
- -Focus on ideal customers who retain longer and expand more, rather than chasing poor-fit accounts
LTV benchmarks by segment
Frequently Asked Questions
Everything you need to know about customer lifetime value
What is Customer Lifetime Value (LTV)?
Customer Lifetime Value (LTV or CLV) is the total revenue a business can expect from a single customer account over the entire duration of their relationship. It accounts for average revenue per account, gross margin, and customer retention. LTV is one of the most critical SaaS metrics because it determines the upper limit of what you can profitably spend to acquire a customer and is essential for building a sustainable go-to-market strategy.
How do you calculate Customer Lifetime Value?
There are two common formulas. The Simple method multiplies monthly ARPA by gross margin percentage by average customer lifespan in months. The Churn-based method divides monthly ARPA multiplied by gross margin by the monthly churn rate. For example, if your monthly ARPA is $500, gross margin is 75%, and monthly churn is 3%, your LTV is $500 x 0.75 / 0.03 = $12,500. Use our CAC calculator to pair this with your acquisition cost analysis.
What is a good LTV:CAC ratio for B2B SaaS?
A good LTV:CAC ratio for B2B SaaS is 3:1 or higher, meaning each customer generates at least three times more value than they cost to acquire. Below 1:1 means you are losing money on every customer. Between 1:1 and 3:1 indicates your unit economics need improvement. Above 5:1 may suggest you are under-investing in growth and could afford to scale acquisition spend to capture more market share.
What is the difference between LTV and CLV?
LTV (Lifetime Value) and CLV (Customer Lifetime Value) refer to the same metric. Both measure the total revenue expected from a customer over their entire relationship with your business. In B2B SaaS, LTV is the more commonly used abbreviation, while CLV appears more frequently in academic literature and some B2C contexts. The calculation, interpretation, and strategic application are identical regardless of which abbreviation you use.
How does churn rate affect LTV?
Churn rate has a dramatic, non-linear impact on LTV. In the churn-based formula, even small reductions in churn create outsized LTV gains. For example, reducing monthly churn from 5% to 3% increases implied customer lifespan from 20 months to 33 months -- a 65% increase in LTV from just a 2 percentage point improvement. This is why retention is often the highest-leverage growth lever for SaaS companies, and why understanding your churn rate calculation is so important.
What is a good Customer Lifetime Value for SaaS?
Good LTV varies significantly by customer segment and price point. SMB SaaS products typically see LTV of $1,000-$10,000. Mid-market SaaS ranges from $10,000-$50,000. Enterprise SaaS can see LTV of $50,000-$500,000 or more. The absolute number matters less than the LTV:CAC ratio -- a $5,000 LTV is excellent if your CAC is $1,000 (5:1 ratio) but poor if your CAC is $4,000 (1.25:1 ratio). Review our SaaS metrics guide for a comprehensive overview of how LTV fits into your broader metrics framework.
How can I increase Customer Lifetime Value?
There are three main levers to increase LTV. First, reduce churn by investing in customer success, improving onboarding, and building proactive health monitoring. Second, increase average revenue per account through upsells, cross-sells, and usage-based pricing tiers that grow with customers. Third, improve gross margin by automating delivery and reducing cost of service. Of these, reducing churn typically has the largest compounding impact on LTV over time.
Should I use the simple or churn-based LTV formula?
Use the Simple formula (ARPA x Gross Margin x Lifespan) when you have reliable historical data on average customer lifespan and your customer base is mature enough to measure retention accurately. Use the Churn-based formula (ARPA x Gross Margin / Monthly Churn Rate) when you know your monthly churn rate but do not yet have enough history to determine average lifespan. The churn-based method is more common among earlier-stage SaaS companies because monthly churn is easier to measure from a smaller dataset.
Related Resources
Explore more tools and guides to optimise your unit economics
CAC Calculator
Calculate your Customer Acquisition Cost and pair it with LTV for a complete picture of your unit economics.
Use Calculator →SaaS Metrics Guide
A comprehensive guide to the metrics that matter for B2B SaaS growth, including LTV, CAC, churn, and more.
Read Guide →Churn Rate Calculation Guide
Learn how to accurately measure and reduce churn -- the single biggest lever for increasing customer lifetime value.
Read Guide →SaaS Metrics Calculator
Calculate MRR, ARR, net revenue retention, and other key SaaS metrics alongside your LTV analysis.
Use Calculator →B2B Lead Generation GTM Playbook
Build a scalable acquisition engine that delivers customers with high lifetime value at an efficient CAC.
Read Playbook →Get a Custom LTV Analysis
Schedule a consultation for personalised LTV benchmarking, churn analysis, and retention strategy recommendations.
Book Call →Ready to Increase Your Customer Lifetime Value?
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