CUSTOMER LIFETIME VALUE

Customer Lifetime Value Calculator

Estimate revenue LTV and gross-profit LTV from average order value, purchases per year, gross margin, and customer lifespan.

What this LTV model does

Lifetime value estimates what one customer contributes over the relationship. This page shows a revenue total and a gross-profit total so the same unit can be compared with CAC.

Annual revenue = average order value × purchases per year
Revenue LTV = annual revenue × years
Annual gross profit = annual revenue × gross margin
Gross-profit LTV = revenue LTV × gross margin

Example

An $80 average order, 4 purchases a year, and a 3-year relationship is $320 of annual revenue and $960 of revenue LTV. At a 40% gross margin, gross-profit LTV is $384.

What the averages leave out

Order value, frequency, and margin are held constant. Churn curves, discounting, refunds, and segment differences are outside this page. Use one customer group and one observation window for the averages.

Frequently asked questions

Should LTV use revenue or gross profit?

Gross profit is the more conservative comparison with CAC, because revenue still has to cover product cost. Label the definition you use.

What if the company is new and has no history?

Use a labeled scenario and update it when repeat-purchase data exists.

Can lifespan be a fraction of a year?

Yes. 18 months is 1.5 years.

Does this discount future cash?

No. It is an undiscounted sum of the entered averages.

More calculators

Customer Acquisition Cost Calculator →ROAS Calculator →Gross Margin Calculator →

Calculations run in your browser. Values are not uploaded or stored.