Customer Lifetime Value Calculator
Estimate customer lifetime value from average purchase, frequency and lifespan — with an optional margin-adjusted figure.
How it works
LTV = average purchase × purchases per year × lifespan (years) · Profit LTV = LTV × gross margin%
Lifetime value multiplies what a customer spends per purchase by how often they buy and how many years they stay. That gives revenue LTV; applying your gross margin converts it to the profit a customer is actually worth. The margin-adjusted figure is the honest number to compare against what you spend to acquire a customer.
Worked example
A customer who spends $50 per visit, 12 times a year, for 3 years is worth $50 × 12 × 3 = $1,800 in revenue. At a 60% gross margin, the profit-based LTV is $1,080.
Frequently asked questions
What is customer lifetime value?
LTV is the total revenue (or profit) you expect from an average customer across their entire relationship with you. It sets the ceiling on what you can afford to spend to acquire one.
Should LTV use revenue or profit?
Profit-based LTV is more honest — apply your gross margin so you compare like with like against acquisition cost. This calculator shows both the revenue LTV and a margin-adjusted figure.
How does LTV relate to acquisition cost?
A common healthy target is an LTV-to-CAC ratio of about 3:1. If you spend more to acquire a customer than their margin-adjusted LTV, growth actually destroys value.
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Educational estimate, not financial advice.