About the LTV Calculator
LTV Calculator helps estimate the key numbers involved in customer economics decisions. It is designed for quick scenario comparison: enter a realistic set of values, calculate the result, then change one assumption at a time to see what has the greatest effect. Unlike a static table, the result responds to your inputs and keeps the calculation in your browser. Campaign metrics are meaningful only when spend, revenue, clicks, impressions, customers, and conversions use the same date range, attribution rules, channel scope, and currency.
How to use this calculator
Enter values that match your situation and select Calculate result. Review the main result and its supporting figures, then change one input at a time to compare scenarios. Results are rounded for readability while the calculation retains additional precision internally.
Information you will need
- AOV
- Frequency
- Years
- Margin
How the calculation works
Customer lifetime value from order value, frequency, and lifespan. Read the primary result together with the supporting values rather than focusing on one number alone. A useful estimate should make its assumptions visible. If the answer looks surprising, verify the unit, rate, time period, and whether the entered value is gross or net. Run a conservative and an optimistic scenario to understand the range of possible outcomes.
Formula or method
LTV = AOV × Frequency × Years × Margin.
Worked example
$75 AOV, 4x/year, 3 years, 50% margin.
The example is illustrative rather than a recommendation. Use your own verified values and keep all monetary or measurement units consistent. When comparing alternatives, save or note each result so the assumptions do not become mixed.
How to interpret the result
The primary output answers the main question posed by the ltv calculator, while the additional cards provide context. A result with many decimal places is not necessarily more certain. The displayed precision makes comparison easier, but uncertainty in the inputs can be larger than the rounding difference.
Compare channels only after aligning attribution windows and conversion definitions. Review the metric beside gross margin, customer quality, repeat purchases, refunds, and incremental lift rather than optimizing one ratio in isolation.
Limitations and important notes
The ltv calculator calculates a reporting metric, not a forecast or guarantee. Attribution platforms can assign the same conversion differently because of lookback windows, view-through credit, cross-device behavior, modeled conversions, refunds, and data delays. Revenue efficiency does not automatically equal profit. Reconcile source data, use contribution margin where relevant, and compare like-for-like campaign periods before changing budgets.
Frequently asked questions
How do I calculate customer lifetime value?
The basic formula is LTV = average order value x purchase frequency x average customer lifespan. Example: $75 AOV x 4 purchases per year x 3 years = $900 revenue LTV. For a profitability view, multiply by gross margin: $900 x 50% = $450 profit LTV. For subscriptions, use ARPA x gross margin divided by monthly churn. Track LTV by customer segment, since a blended number hides the difference between high-value repeat buyers and one-time purchasers.
What is a good LTV to CAC ratio?
A 3:1 LTV:CAC is the standard healthy benchmark — the customer is worth 3x what you paid to acquire them. Below 1:1 means losing money; 1–2:1 is high risk. Above 5:1 often means under-investing in growth. The ideal varies by stage: early-stage companies may target 5:1+ for safety, growth-stage 3–5:1, and enterprise 5–10:1. Use gross-margin LTV rather than revenue LTV, and read the ratio alongside CAC payback period and churn.
What is the difference between LTV and CLV?
LTV and CLV (customer lifetime value) mean the same thing — the total revenue or profit a customer generates over their relationship with you. The terms are interchangeable. The distinction that matters is revenue LTV versus profit LTV: revenue LTV (AOV x frequency x lifespan) overstates value, while profit LTV multiplies by gross margin. Finance and investors generally want margin-adjusted LTV, and your LTV:CAC ratio should use matching bases — don't compare revenue LTV to fully loaded CAC.
How do I calculate LTV for a subscription business?
For subscriptions, LTV = (ARPA x gross margin %) divided by monthly churn rate. Example: $50 average revenue per account, 80% gross margin, 5% monthly churn gives ($50 x 0.80) divided by 0.05 = $800. Churn drives the math — cutting monthly churn from 3.5% to 2.5% can lift LTV by roughly 40% and extend average lifetime by over a year. For accuracy, compute churn from cohorts rather than a single blended rate.
What is a good LTV for ecommerce?
There is no universal LTV number; what matters is LTV relative to CAC and payback. For ecommerce, a healthy LTV:CAC of 2:1–3:1 with a payback under 3–6 months is commonly considered good, and DTC brands with strong retention can justify 3:1–4:1. Ecommerce LTV depends on repeat purchase rate: a one-time buyer at a $60 AOV has an LTV of $60, while a customer who returns 4 times a year for 3 years is worth $720. Benchmarks vary by category.
Is an LTV:CAC ratio above 5:1 always good?
No. Above 5:1 in a growth-stage business usually signals you are under-investing in acquisition — if you can spend 50% more on ads and still hit 3:1, you are leaving revenue, market share, and defensibility on the table. Exceptionally high ratios can also mean LTV is overstated (revenue-based instead of margin-based) or expansion revenue is mixed into the number. The right response to 5:1+ is to test whether additional spend still clears your return threshold.
How does churn affect customer LTV?
Churn is the single biggest LTV lever. Because LTV = ARPA x gross margin divided by churn, halving monthly churn roughly doubles LTV. A 1 percentage-point drop in monthly churn extends average customer lifetime by more than 12 months and lifts every downstream metric. Retention work — onboarding, support, loyalty programs, upsells — usually compounds faster than acquisition savings. Track churn by cohort and segment, since blended churn hides which customers actually stay.