Customer Lifetime Value Calculator

Knowing what a customer is truly worth over the long haul is the foundation of smart marketing math. This customer lifetime value calculator turns four simple numbers - average sale value, how often people buy, how long they stick around, and your gross margin - into the gross and margin-adjusted LTV that should anchor every acquisition decision you make.

Once you know your LTV, you can set a sane ceiling on what you're willing to pay to win a new customer. The customer lifetime value calculator below converts your LTV into a recommended maximum customer acquisition cost (CAC) using the common 3:1 LTV:CAC target, so your SEO, local ads, and content budgets stay profitable instead of guesswork.

Plug in your own figures and the customer lifetime value calculator updates instantly - no sign-up, no spreadsheet. Use it to sanity-check campaigns before you spend, then track whether ranking improvements are actually lowering your real acquisition cost over time.

FAQ

How is customer lifetime value calculated?

The standard formula is: LTV = average sale value × purchases per year × customer lifespan in years. To get a profit-based figure, multiply that gross LTV by your gross margin percentage. The margin-adjusted number is the one to use for budgeting, since it reflects actual contribution rather than top-line revenue.

How much should I spend to acquire a customer?

A widely used benchmark is a 3:1 LTV:CAC ratio, meaning you aim to earn at least three dollars of lifetime value for every dollar of acquisition cost. This calculator shows your maximum break-even CAC (1:1) and the healthier 3:1 target so you can choose a budget that leaves room for profit and overhead.

Why does gross margin matter for LTV?

Revenue isn't profit. A customer who generates $1,000 in sales but only 20% margin contributes $200 you can actually reinvest. Using margin-adjusted LTV prevents you from overspending on acquisition. To track LTV alongside real local ranking gains, start free with ProMapRanker.