LTV Calculator
Find what a customer is worth over their lifetime, and how much you can afford to spend to win one.
- Lifetime revenue
- $487.50
- Max CAC at 3:1
- $89.38
Save time, just kivi it.
How to use the LTV calculator
- Enter your average order value and how many times a typical customer buys each year.
- Enter how many years a customer usually keeps buying from you.
- Add your gross margin to see lifetime value in profit, and a target maximum acquisition cost.
LTV formulas
Profit-based LTV is safer for decisions than revenue-based LTV, because you pay for ads out of profit, not revenue.
Example
Customers spend 65 per order, buy 3 times a year and stay for 2.5 years. Lifetime revenue is 487.50. At a 55% gross margin, LTV is 268.13, so to keep a 3:1 ratio you can spend up to 89.38 to acquire a customer.
Why LTV matters
LTV tells you how much a customer is really worth, which sets how much you can spend on ads, discounts and service. Brands with strong repeat purchase can outbid competitors for new customers and still profit.
How to increase LTV
Raise repeat purchase with email and SMS, loyalty rewards and subscriptions, increase order value with bundles, and improve product quality and service so customers stay longer.
Frequently asked questions
How do I calculate customer lifetime value?
Multiply average order value by purchases per year and customer lifespan, then by gross margin for a profit-based LTV.
What is a good LTV to CAC ratio?
A common target is 3:1 or better.
How do I find customer lifespan?
Look at how long customers keep ordering in your data, or estimate it as 1 divided by your yearly churn rate.
Should LTV use revenue or profit?
Use profit for spending decisions; revenue LTV looks bigger but ignores costs.
Is LTV useful for new stores?
Yes, as an estimate. Update it as real repeat purchase data comes in.
Terms on this page
Was this tool helpful?
Missing a tool you need?