Customer lifetime value (LTV) calculator
Lifetime value is the gross profit one customer brings over their life with you: order value times how often they buy times how long they stay times margin. The profit version, not the revenue version, is what actually funds acquisition. Solve it any way and see the CAC it supports.
Using typical funnel assumptions, to show that the metric above can’t tell you if you’re winning. Your real numbers live in the full calculator.
Drop in one product and the Target ROAS calculator works your whole P&L backwards to the number that actually decides it, free, no signup.
What is customer lifetime value (LTV)?
Lifetime value is the gross profit a single customer brings over their entire relationship with you. The version that matters is profit, not revenue: lifetime revenue looks impressive but does not pay for ads. Lifetime gross profit is the pool that funds acquisition, so it is the number to compare against CAC.
Four levers drive it: how much a customer spends per order, how often they buy, how long they stay, and your margin. Move any one and LTV moves with it.
How to calculate LTV
Customer lifespan is roughly 1 / annual churn rate. If half your customers lapse each year (50% churn), the average lifespan is about 2 years; at 25% churn it stretches to about 4 years and LTV doubles. Lowering churn is the highest-leverage LTV move there is.
What is a good LTV?
LTV has no good value on its own; it is only meaningful next to CAC. The common target is an LTV that is at least three times CAC, but how fast that lifetime profit arrives matters just as much. Check both with the LTV:CAC calculator and the payback period calculator.
LTV-justified CAC assumes a repeat curve that has not happened yet. The lifetime value is a forecast; the ad invoice is real cash today. Fund acquisition on first-order contribution and treat LTV as upside, unless you have a measured repeat curve and the cash to wait. The unit economics calculator models this honestly, modelled vs measured.
How to increase LTV
- Lengthen lifespan by cutting churn: better onboarding, post-purchase flows, a reason to come back, subscription where it fits.
- Raise purchase frequency: email and SMS lifecycle, replenishment reminders, complementary launches.
- Lift AOV with bundles, volume tiers and upsells, which raises every future order too.
- Protect margin: returns, discounting and rising costs all eat the profit version of LTV directly.
The operator’s playbook
How a paid-media operator reads this number, not a glossary definition.
Profit LTV, not revenue LTV+
Plenty of brands quote LTV as lifetime revenue, which is vanity. The number that funds acquisition is lifetime gross profit: order value times lifetime orders times margin. Always strip to profit before you compare it to CAC.
Modelled LTV is where brands overspend+
LTV-justified CAC assumes a repeat curve that has not happened yet. The lifetime value is a forecast; the ad spend is real cash today. Fund acquisition on first-order contribution and treat LTV as upside, unless you have a measured repeat curve and the cash to wait for payback.
Frequently asked questions
How do you calculate LTV?
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Lifetime gross profit = average order value x purchases per year x customer lifespan in years x gross margin. A $75 AOV bought twice a year for two years at 45% margin is about $135 in lifetime profit. This tool solves for any of those inputs too.
How does churn fit into LTV?
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Customer lifespan is roughly 1 divided by your annual churn rate. If 50% of customers lapse each year, the average lifespan is about 2 years; at 25% churn it is about 4 years. Lower churn lengthens lifespan and lifts LTV directly.
Should I use revenue or profit for LTV?
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Profit. Lifetime revenue looks big but does not pay for ads; lifetime gross profit does. Compare the profit version to CAC.
What is a good LTV:CAC?
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Around 3:1 is the common benchmark, but payback period matters more day to day. A high ratio with a slow payback still strangles cash flow.
Is LTV the same as CLV?
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Yes. Customer lifetime value (LTV) and customer lifetime value (CLV) are the same metric. Just make sure you are using the gross-profit version, not lifetime revenue.
How do I increase customer lifetime value?
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Lower churn to lengthen the relationship, raise purchase frequency with lifecycle marketing, lift AOV with bundles, and protect margin. Churn is usually the biggest lever.
Built by Yehonatan Tav, paid media for ecommerce brands spending $50k to $500k a month. Figures are illustrative; run the logic on your own numbers.