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LTV Calculator

LTV Calculator

ltv calculator Calculate customer lifetime value and compare LTV with customer acquisition cost.

Calculate customer lifetime value from average order value, purchase frequency, customer lifespan, margin, and CAC.

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Use the LTV Calculator

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Revenue LTV

$600.00

Gross profit LTV

$330.00

LTV:CAC ratio

5.50:1

A gross profit LTV of $330.00 compared with $60.00 CAC gives a 5.50:1 ratio.

LTV means customer lifetime value. It estimates how much revenue or gross profit a customer produces across the full customer relationship.

A simple ecommerce formula is: LTV = average order value x purchases per customer per year x average customer lifespan. If average order value is $80, purchase frequency is 3 per year, and lifespan is 2.5 years, revenue LTV is $600.00.

For paid marketing decisions, profit-based LTV is usually more useful than revenue LTV. If gross margin is 55%, the gross profit LTV is $330.00. Comparing that against CAC helps show whether acquisition spend is sustainable.

Use this calculator when reviewing paid acquisition, retention, repeat purchase behavior, and customer growth quality. Compare LTV with CAC, CPA, ROAS, ROI, and product margin before scaling spend.

How to use it

Step 1

Enter average order value for a typical customer purchase.

Step 2

Enter purchase frequency and average customer lifespan.

Step 3

Add gross margin to estimate profit-based LTV.

Step 4

Enter CAC to review the LTV:CAC ratio before scaling acquisition spend.

FAQ

What is LTV?

LTV means customer lifetime value. It estimates how much revenue or gross profit a customer produces over the customer relationship.

How do you calculate LTV?

A simple ecommerce formula is average order value multiplied by purchases per year multiplied by customer lifespan.

Should LTV use revenue or profit?

Revenue LTV is useful for top-line estimates, but profit-based LTV is better when comparing against CAC or paid acquisition cost.

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Related guides

Article

AOV vs LTV: how they work together

AOV and LTV measure different parts of customer value. Learn how average order value affects lifetime value and acquisition decisions.