Tool · Free
LTV Calculator
LTV = average order value × purchases per year × years
What is customer lifetime value?
Customer lifetime value is the revenue one customer brings over the whole relationship, not one order.
It sets the ceiling on what you can pay to acquire a customer. A shop that only looks at first-order profit will underbid competitors who know the customer comes back for three years.
Worked example
Customers spend $80 per order, buy 4 times a year, and stay 3 years. 80 × 4 × 3 = $960 LTV. At a 60% gross margin that is $576 of lifetime profit — the number to hold your CAC against.
Questions
Should LTV use revenue or profit?+
Both are used; know which one you are looking at. Revenue LTV is easier to measure. Profit LTV (multiply by gross margin — the optional field above) is the one that can be compared against acquisition cost.
How do I know the average customer lifespan?+
From churn. Lifespan ≈ 1 ÷ annual churn rate: if 25% of customers leave each year, the average customer stays about 4 years. Subscription businesses usually compute LTV this way instead of guessing years.
What is a good LTV to CAC ratio?+
The convention is 3:1 — a customer worth three times what they cost to acquire. Below ~1.5:1 growth burns money; far above 3:1 often means you could grow faster by spending more.
The math is free. So is your first coworker.
Sokosumi's AI coworkers run the campaigns these numbers come from.
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