Customer lifetime value (LTV) calculator

Enter order value, how often customers buy and for how long. You'll get lifetime value in revenue and profit, and how it compares with your CAC.

Total orders ÷ unique customers, over a year.

How long a typical customer keeps buying.

Lifetime value (gross profit)
$270.00
What a customer is worth after product costs.
Lifetime revenue
$450.00
$150.00 a year
LTV:CAC
6.0×
On gross profit.

How to calculate customer lifetime value

lifetime revenue = average order value × orders per year × lifespan in years
lifetime value (profit) = lifetime revenue × gross margin

The first line tells you what a customer spends with you. The second tells you what they're worth, which is the number to set against acquisition cost.

Worked example

Customers spend $60 an order, order 2.5 times a year and keep buying for 3 years. Gross margin is 60% and it costs $45 to acquire a customer.

lifetime revenue = $60 × 2.5 × 3 = $450
lifetime value = $450 × 60% = $270
LTV:CAC = $270 ÷ $45 = 6.0

On revenue the ratio would be 10:1, which sounds better than it is. On profit it's 6:1, still comfortably above the usual 3:1 benchmark.

Where the estimate goes wrong

  • Lifespan is a guess until you have years of data. Test the answer with a shorter lifespan.
  • Averages hide segments. Customers from one channel or first product often repeat far more than others.
  • Revenue isn't value. Without a margin, the calculator only shows lifetime revenue.

Not sure of your acquisition cost? Use the CAC calculator.

With Ordinary

Lifetime value you measure, not assume.

This formula needs you to guess two numbers: how often customers buy and how long they stay. Small changes to either can double the answer.

Ordinary measures it instead. It groups customers by the month they first ordered and tracks what each group actually spent at 30, 60, 90 and 180 days, broken down by acquisition channel and first product, with LTV:CAC at 180 days alongside.

Connect your store How customer analytics works

Frequently asked questions

How do you calculate customer lifetime value?

Multiply average order value by the number of orders a customer places per year, then by the number of years they keep buying. Multiply by your gross margin to turn that lifetime revenue into lifetime gross profit.

What is the difference between CLV and LTV?

Nothing. Customer lifetime value (CLV) and lifetime value (LTV) are two names for the same metric. What matters more is whether a figure is measured in revenue or in profit, so always say which.

What is a good LTV:CAC ratio?

A ratio of 3:1 on gross profit is the common benchmark: each customer earns three times what it cost to acquire them. Below 1:1 you lose money on every customer. Well above 5:1 can mean you're under-investing in growth.

How do I estimate customer lifespan?

A common shortcut is 1 ÷ annual churn rate: if 40% of customers stop buying each year, the average lifespan is 2.5 years. For a young brand, use a conservative figure; lifetime value based on an optimistic lifespan is the easiest number to fool yourself with.

Should LTV use revenue or profit?

Profit, when you compare it with acquisition cost. Revenue LTV ignores product costs, so a revenue LTV:CAC of 3:1 can still lose money on a low-margin product.

More free calculators