LTV Calculator

Customer lifetime value (LTV) is the total revenue — or gross profit — one customer brings over the whole relationship.

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%
Lifetime value (gross profit)$185.63
Lifetime revenue$337.50
Revenue per customer per year$135.00
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What is customer lifetime value?

LTV = average order value × orders per year × years as a customer. Multiply by gross margin to get lifetime profit, which tells you how much you can spend to acquire a customer.

How to use the LTV calculator (formula)

Lifetime value (gross profit) = Lifetime revenue × Gross margin ÷ 100 Lifetime revenue = Average order value × Orders per customer per year × Customer lifespan (years) Revenue per customer per year = Average order value × Orders per customer per year

What each field means

  • Average order value — Average order value.
  • Orders per customer per year — Orders per customer per year.
  • Customer lifespan (years) — Average years a customer keeps buying.
  • Gross margin — Gross margin percentage.

Worked example

Using these numbers: average order value $45.00, orders per customer per year 3, customer lifespan (years) 2.5, gross margin 55%.

The lifetime value (gross profit) is $185.63.

  • Lifetime revenue: $337.50
  • Revenue per customer per year: $135.00

What is a good LTV?

The key test is LTV versus CAC: lifetime gross profit should be at least 3× CAC.

Tips to improve your result

  • Use gross profit LTV for acquisition decisions.
  • Retention emails and remarketing raise LTV cheaply.
  • Segment LTV by first product purchased.
  • Revisit LTV every quarter.

Frequently asked questions

What is the LTV formula?

AOV × purchase frequency × customer lifespan (× gross margin for profit LTV).

LTV vs CAC?

LTV is what a customer is worth; CAC is what it costs to get them.

How does retention affect LTV?

Longer lifespans and more orders per year increase LTV directly.

How do I increase LTV?

Post-purchase flows, loyalty offers, subscriptions and better product quality.

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