Free calculator
Customer Lifetime Value Calculator
What one customer spends with your store before they stop buying.
Inputs
Results
Customer lifetime value
$563
Over 3.0 years of buying.
- Gross profit LTV$338
- Value per year$188
- Max CAC at 3:1 LTV to CAC$113
Formula
- Annual value = average order value × orders a year
- Lifespan = years, or 1 ÷ (1 − retention rate) when you only know retention
- LTV = annual value × lifespan
- Gross profit LTV = LTV × gross margin
FAQ
What is customer lifetime value?+
Customer lifetime value (LTV or CLV) is the total revenue a customer brings in from their first order to their last. It tells you how much you can spend to acquire a customer and still make money.
How do I calculate LTV without knowing customer lifespan?+
Use your annual retention rate. Expected lifespan in years is 1 divided by (1 minus retention). A 60 percent retention rate gives an expected lifespan of 2.5 years.
Should LTV use revenue or profit?+
Use gross profit when you compare LTV with acquisition cost. Revenue LTV overstates what you can afford to spend, because product cost comes out of every order.
What is a good LTV to CAC ratio?+
A common benchmark is 3 to 1, measured on gross profit. Below that, acquisition is eating most of the profit a customer brings in. Far above it, you may be underspending on growth.
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