Quick answer
The Customer Lifetime Value Calculator shows gross profit a customer brings over their lifetime. How it works: Lifetime revenue = order value × orders per year × years; LTV = lifetime revenue × gross margin. For example, with average order value of $45, orders per year of 4, and years as a customer of 2.5, the lifetime value (profit) is $180.00.
How to use the Customer Lifetime Value Calculator
- Enter average order value.
- Enter orders per year.
- Enter years as a customer.
- Enter gross margin.
- Read lifetime value (profit) and the breakdown. Use Share to send the exact numbers, or Print to save a PDF.
How it's calculated
- Lifetime revenue = order value × orders per year × years
- LTV = lifetime revenue × gross margin
Worked example
With average order value of $45, orders per year of 4, years as a customer of 2.5, and gross margin of 40 %:
Lifetime value (profit): $180.00. Lifetime revenue: $450.00.
Customer Lifetime Value questions
How do you calculate customer lifetime value (LTV)?
LTV = average order value × orders per year × years a customer stays × your profit margin. It estimates the profit one customer brings over time.
Should LTV use revenue or profit?
Profit. Revenue-based LTV looks bigger but hides fees and product costs, which can lead you to overspend on ads.
What is a good LTV to CAC ratio?
Around 3 to 1 or better is a common target. Below 1 to 1, you lose money on every new customer.