Customer Lifetime Value (LTV) Calculator

Calculate customer lifetime value and the LTV:CAC ratio from order value, purchase frequency, lifespan and margin.

How do you calculate customer lifetime value?

Customer lifetime value is the profit a customer generates over the whole relationship: average order value × purchases per year × years as a customer × gross margin.

Example

A customer spending 60 per order, 4 times a year for 3 years, at a 40 % margin, is worth 720 in revenue and 288 in profit.

LTV:CAC ratio

Divide LTV by customer acquisition cost (what you spend in marketing and sales to win one customer). A ratio of 3:1 or more is a common benchmark for a healthy business; below 1:1 you lose money on every customer.

Improve LTV by raising order value, encouraging repeat purchases and reducing churn — measure it with the Churn Rate Calculator.

Frequently asked questions

Revenue LTV or profit LTV?

Profit LTV (with margin) is better for deciding how much to spend on acquisition.

How do I estimate lifespan?

Roughly 1 ÷ yearly churn rate; 25 % churn means about 4 years.

What is CAC?

Customer acquisition cost: total marketing and sales spend ÷ new customers.