Calculate Customer Lifetime Value (LTV / CLTV) using multiple methods. LTV tells you how much revenue a customer will generate over their entire relationship with your business.
Customer Metrics
Calculate LTV using simple, subscription, or DCF method
LTV (also CLTV or CLV) is the total revenue you can expect from a single customer over their entire relationship with your business. Higher LTV means each customer is more valuable and you can afford to spend more to acquire them.
What is the difference between simple and DCF LTV?
Simple LTV = ARPU × Margin × Lifetime months. It ignores the time value of money. DCF-Adjusted LTV discounts future revenue streams at your cost of capital — giving a more accurate economic value. For long-lifetime products (>3 years), DCF LTV is significantly lower.
What is a good LTV:CAC ratio?
3:1 or higher is the standard benchmark. At 3:1, you earn 3x what you spent to acquire each customer. Below 1:1 means you lose money on each customer. SaaS companies often target 3:1 to 5:1 ratios, with top companies sometimes hitting 5:1 to 10:1.
How do I increase LTV?
1) Reduce churn through better onboarding and customer success. 2) Upsell and cross-sell (expansion revenue). 3) Raise prices (premium tiers). 4) Increase product stickiness and switching costs. 5) Deliver consistent product value that grows with the customer.