Lifetime Value Calculator for SaaS products

What is customer lifetime value?

The customer lifetime value - often just "lifetime value" and abbreviated either as CLTV, CLV or LTV - is the total revenue each single customer brings into your business. The (C)LTV is averaged over all your customers and highly dependend on the Average Revenue Per Account (ARPA) and the churn rate.

Why is LTV important?

Knowing and understanding your lifetime value is crucial, because it tells you how much money you can spend on each customer while staying profitable. The LTV is the amount you have to cover costs of goods sold (COGS - e.g. server costs), customer support, acquisition costs, and more.

A rule of thumb is that you should spend about 30% of LTV on acquiring a customer, no more than 30% on delivering your service, and use the remaining 40% for other costs and making a profit.

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