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Customer lifetime value (LTV) calculator

Enter your average order value, how many times a customer buys in a year, for how many years, and your gross margin. You get lifetime revenue and gross profit per customer; add your acquisition cost to see the LTV:CAC ratio.

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Lifetime value (gross profit)

$135.00

Lifetime revenue
$225.00
LTV:CAC
3.4 : 1
Most you can pay per customer to break even
$135.00

How it's calculated

Lifetime revenue
= AOV × orders per year × years
Lifetime value (profit)
= lifetime revenue × gross margin
LTV:CAC
= lifetime value ÷ acquisition cost

Example

$45 average order, 2.5 orders a year for 2 years, 60% gross margin: revenue 45 × 2.5 × 2 = $225, lifetime value 225 × 60% = $135. If a customer costs $40 to acquire, LTV:CAC is 3.4.

Use profit, not revenue

Revenue LTV looks impressive but can't be compared with acquisition cost: what you can spend to win a customer comes out of the profit they bring. That's why this calculator multiplies by your gross margin.

Raising lifetime value

Repeat purchases and order value move it most: subscriptions for consumables, follow-up offers after the first order, and upsells at checkout or right after payment.

FAQ

How do I calculate customer lifetime value?

Average order value × orders per year × years as a customer gives lifetime revenue; multiply by gross margin for lifetime value in profit.

What's a good LTV:CAC ratio?

Above 1 means a customer earns back what they cost; many businesses aim for 3 or more to cover overheads. It depends on how fast the profit comes back.

How do I estimate customer lifespan?

Look at how long past customers kept buying, or use 1 ÷ yearly churn rate. Be conservative for a new store.

What's the difference between LTV and CLV?

None; both mean customer lifetime value.

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