Calculators / Customer lifetime value

Customer lifetime value calculator

Enter what customers spend, how often they buy and how long they stick around. Add what a customer costs to win to see if the numbers work.

Your customers

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%
$
From the customer acquisition cost calculator.

Per customer

Revenue per year
Gross profit per year
Lifetime revenue
Lifetime value (profit)
LTV to CAC ratio
Months to earn back CAC

The formula

Revenue per year = order value × orders per year
Lifetime value = revenue per year × gross margin × years
LTV to CAC = lifetime value ÷ acquisition cost

Worked example

A coffee store's customers spend $55 an order, order 2.4 times a year and stay about 3 years. Gross margin is 40%, and a new customer costs $25 in ads.

Revenue per year55 × 2.4 = $132.00
Profit per year132 × 0.40 = $52.80
Lifetime value52.80 × 3 = $158.40
LTV to CAC158.40 ÷ 25 = 6.3 to 1
Payback25 ÷ 52.80 × 12 = 5.7 months

A customer earns back what they cost in under six months and is worth over six times their acquisition cost. That is a business that can afford to spend more on ads, as long as new customers behave like the old ones.

Getting honest numbers

Use profit, not revenue

A lifetime value of $396 in revenue sounds much better than $158 in profit, but only the profit can pay for ads. Comparing revenue LTV with CAC makes almost any campaign look affordable.

Watch for averages hiding two groups

Many stores have a few loyal customers who order every month and many who buy once. Average them together and the "typical" customer does not exist. If you can, work out lifetime value for one-time buyers and repeat buyers separately.

New stores should be cautious

If you have only been selling for a year, you do not know how long customers stay yet. Use a short lifespan until your own data says otherwise.

Formula and examples last checked October 12, 2026.

Questions people ask

What is customer lifetime value?

The money a customer brings in over the whole time they keep buying from you. This calculator uses gross profit rather than revenue, because profit is what pays for the marketing that won the customer in the first place.

How do I find how long a customer stays?

Look at customers who first bought from you a year or two ago and see how long they kept ordering. If you only know your yearly repeat rate (the share of last year's customers who bought again this year), a rough lifespan is 1 ÷ (1 − repeat rate). A 50% repeat rate gives about 2 years; 60% gives 2.5.

What is a good LTV to CAC ratio?

A ratio of 3 to 1 is a widely quoted rule of thumb: each customer brings in three times what they cost to acquire. Below 1 to 1 you lose money on every customer. Well above 3 to 1 can mean you are spending too little on growth. Treat it as a guide, not a target.

Should I use average order value or a single product price?

Average order value, from your store reports. Customers often buy more than one item per order, and that is part of what they are worth.

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