Free LTV calculator

Customer lifetime value calculator

What is a customer worth to you? Enter order value, how often customers buy and for how long to see lifetime value in profit and your LTV to CAC ratio.

By Trueclip Updated

Your customers

What a customer spends per order

How often a customer buys

Years a customer keeps buying

Share of revenue after product costs

More options

Ad spend per new customer

Customer lifetime value

Gross profit over their lifetime (revenue $360)

$180
LTV:CAC
4.0 : 1
Healthy
Max CAC at 3:1
$60
A common ceiling

How lifetime value is calculated

Lifetime value multiplies how much, how often and how long a customer buys, then keeps only the profit.

  • Revenue LTV

    Order value × orders per year × years.

  • Profit LTV

    Revenue LTV × gross margin.

  • LTV:CAC

    Profit LTV ÷ cost to acquire a customer.

  • CAC ceiling

    Profit LTV ÷ 3 keeps a 3:1 ratio.

Worked example: a $60 customer
$60 × 3 orders × 2 years
$360
× 50% gross margin
Lifetime value (profit)
$180
With a $45 CAC that’s 4.0 : 1. You could spend up to $60 and stay at 3:1.

Customer lifetime value formula

Three versions of the CLV formula. Pick the one that matches the data you have.

FormulaCalculationBest for
Simple CLVOrder value × orders per year × yearsA quick revenue estimate
Profit CLVSimple CLV × gross marginComparing with acquisition cost (this calculator)
Churn-based CLVRevenue per period × margin ÷ churn rateSubscriptions and SaaS

Customer lifetime value examples

Two illustrative stores, calculated with the same formula as the tool above.

Skincare brand
$45 × 4 orders × 3 years
$540
× 60% gross margin
Lifetime value (profit)
$324
With a $60 CAC: 5.4 : 1. Room to spend more on acquisition.
Coffee subscription
$28 × 10 orders × 1.5 years
$420
× 45% gross margin
Lifetime value (profit)
$189
With a $35 CAC: 5.4 : 1. Healthy, and frequency does the work.

Knowing your LTV tells you how high a first-order CPA you can afford. Check that CPA with the CPA calculator.

What affects customer lifetime value

Lifetime value moves with a handful of levers, most of which you control.

  • Repurchase cycle

    Products people run out of (coffee, skincare) repeat naturally; durable goods rarely do.

  • Price and margin

    Higher-margin products add more profit to every repeat order.

  • First experience

    Delivery, packaging and the first use decide whether there's a second order.

  • Range depth

    More related products give customers something else to buy.

  • Follow-up timing

    Reminders sent when customers are likely to run out bring them back.

  • Trust

    Honest reviews and real customer videos reduce regret and returns.

Lifetime value by business model

The same formula, weighted differently depending on how customers buy.

Business modelWhat drives LTVFormula to use
One-off purchasesOrder value and referralsProfit per order; LTV ≈ first order
ConsumablesHow often customers reorderOrder value × orders per year × years × margin
SubscriptionsMonths before cancellingMonthly revenue × margin ÷ monthly churn
Software (SaaS)Retention and plan upgradesRevenue per account × margin ÷ churn

How to increase customer lifetime value

Each lever moves one part of the formula: order value, frequency or lifespan.

  • Bigger orders

    Bundles, multi-packs and free-shipping thresholds lift order value.

  • More frequent orders

    Replenishment reminders and subscriptions bring customers back.

  • Longer relationships

    Good support and honest expectations reduce churn.

  • Use profit, not revenue

    Compare CAC with gross-profit LTV, never revenue LTV.

  • Segment customers

    Your best customers often come from specific channels. Spend there.

  • Recheck quarterly

    LTV drifts as prices, products and retention change.

LTV to CAC ratio: what it means

A rule of thumb, not a law. Your cash flow and payback time matter too.

RatioWhat it meansWhat to do
Below 1:1Each new customer costs more than they bring inCut acquisition cost or raise margin before scaling
1:1 to 3:1Profitable on paper, but thinImprove retention and order value; scale carefully
3:1 and upCommonly treated as healthyRoom to grow spend while watching payback time
Well above 5:1Possibly under-investingTest more spend; you may be leaving growth on the table

FAQ

Questions.

How do you calculate customer lifetime value?

Multiply average order value by orders per year and by the number of years a customer keeps buying. Multiply that by gross margin to get lifetime value in profit, which is the number to compare with acquisition cost.

What is a good LTV to CAC ratio?

A commonly used rule of thumb is at least 3:1, meaning a customer brings in three times what it cost to acquire them in gross profit. Below 1:1 you lose money on every new customer.

Should LTV use revenue or profit?

Profit. Revenue LTV looks bigger but ignores product costs, so comparing it with CAC overstates how much you can spend to win a customer.

How do I find my customer lifespan?

Look at how long past customers kept ordering in your store data, or estimate it as 1 divided by your yearly churn rate. Be conservative if your store is young.

How can I increase customer lifetime value?

Raise order value with bundles, get customers to buy again with follow-up email and subscriptions, and keep product quality and support high so they stay longer.

How does LTV change what I can spend on ads?

If customers reliably buy again, you can accept a higher CPA on the first order. The calculator's 'max CAC at 3:1' shows a ceiling that keeps the ratio healthy.

What is a good customer LTV?

One that is comfortably higher than what it costs to acquire a customer. A common benchmark is lifetime value in gross profit at least three times your CAC. The absolute number matters less than that ratio and how quickly you earn the CAC back.

What is the difference between CLV and LTV?

Nothing in practice. Customer lifetime value (CLV or CLTV) and lifetime value (LTV) are used for the same idea: the total value a customer brings over their relationship with you.

How do you calculate LTV for a subscription or SaaS business?

Use monthly revenue per customer × gross margin ÷ monthly churn rate. A $30 plan at 80% margin with 5% monthly churn gives $30 × 0.8 ÷ 0.05 = $480.

Can you give an example of customer lifetime value?

A skincare customer spends $45 per order, buys four times a year for three years, at a 60% gross margin. Revenue LTV is $45 × 4 × 3 = $540, and lifetime value in profit is $540 × 0.6 = $324.

How often should I recalculate LTV?

Every quarter, or whenever prices, products or retention change. Early estimates are rough, so update them as real repeat-purchase data comes in.

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