What is LTV and why is it important?

LTV (Lifetime Value) is the total revenue a customer brings during their relationship with your business. It forms the basis for marketing budget, pricing, and growth strategy decisions.

What is the ideal LTV/CAC ratio?

In SaaS, 3:1 is considered the minimum healthy ratio. You should get at least 3 TL lifetime value for every 1 TL customer acquisition cost. Above 5:1 is ideal.

What should CAC payback period be?

Recovering customer acquisition cost within 12 months is recommended. 18+ month payback creates cash flow issues. Payback = CAC / (ARPU x Gross Margin).

Customer Lifetime Value (LTV) Calculator

This calculator is for informational purposes only. Results are estimates and may differ from actual values.

LTV Guide

How Is LTV Calculated?

Simple LTV = ARPU / Churn Rate. With gross margin: LTV = (ARPU x Gross Margin) / Churn Rate. Avg. customer lifetime = 1 / Churn Rate.

LTV = ARPU / Churn | LTV(GM) = (ARPU × GM%) / Churn

Why Is LTV/CAC Ratio Important?

LTV/CAC ratio shows customer unit economics. Below 3x is unsustainable. 3-5x is healthy, above 5x is excellent. Below 1x means losing money on every customer.

How to Increase LTV?

Reduce churn — biggest lever. 5% to 2% churn increases LTV 2.5x.
Increase ARPU — pricing optimization, upsell, cross-sell.
Improve onboarding — early-stage churn is highest.
Build customer success team — proactive support increases retention.

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Customer Lifetime Value (LTV)