Customer Lifetime Value Calculator
Lifetime value is the number that tells you how much you are allowed to spend winning a customer — and most teams overstate it by quoting revenue instead of profit. Enter how much a customer spends, how often, and for how long, then add margin to see what you actually keep.
Customer lifetime value is average order value × purchase frequency × customer lifespan × gross margin. The first three terms give revenue LTV — the total a customer spends over their relationship with you. Multiplying by gross margin turns that into gross-profit LTV, the money you actually keep and the figure that belongs in every CAC and payback decision. Leave margin out and you get revenue LTV, which flatters the business by counting dollars that go straight back out as cost of goods.
LTV Calculator inputs and result
How to use this calculator
- Enter average order valueUse the average revenue of a single purchase. If your basket sizes vary widely, a median can be steadier than a mean skewed by a few large orders.
- Add purchase frequencyEnter how many times a typical customer buys per year. For subscriptions this is usually fixed; for retail, pull it from order history rather than guessing.
- Estimate customer lifespanUse the average number of years a customer stays active. If you do not track it, roughly one divided by your annual churn rate is a serviceable proxy.
- Add gross margin for profit LTVThis is the step most calculators skip. Enter your margin and the tool converts revenue LTV into the gross-profit figure that actually funds acquisition and overhead.
- Export and pair with CACCopy a share link, download the CSV, or print a one-pager — then drop the gross-profit figure into our LTV:CAC tool to see whether your economics scale.
RGM Expert Says
The first thing we do with any LTV a client hands us is ask whether it is revenue or profit, and most of the time it is revenue dressed up as something more. A founder proudly quotes a $1,500 lifetime value, builds an acquisition budget around it, and never accounts for the 55% that walks out the door as cost of goods. The honest number was closer to $675, and half the ‘profitable’ channels were quietly underwater. Margin is not a footnote here; it is the difference between a real LTV and a vanity one.
We also push back on lifespan assumptions, because that single input swings the whole estimate. Teams love to plug in a five-year customer life that the cohort data has never once supported. Our habit is to derive lifespan from observed retention curves rather than optimism — if the curve says customers are gone in eighteen months, the model says eighteen months, however much the business plan wishes otherwise. An LTV built on a hoped-for lifespan is a forecast, not a measurement.
Where this calculator pays off most is as the front half of an allowable-CAC decision. Once you have an honest gross-profit LTV and a target ratio, you can name the most you are permitted to pay for a customer and hold every channel to it. That single discipline — let LTV set the CAC ceiling, not the other way around — quietly prevents most of the overspending we are brought in to clean up.
How it works
LTV chains four inputs together: how much a customer spends per order, how often they order, how long they stay, and how much of that revenue you keep as profit.
- Average order value — average revenue per purchase.
- Purchases per year — how often a customer buys annually.
- Customer lifespan — average active years; roughly 1 ÷ annual churn rate.
- Gross margin — share of revenue kept as profit; converts revenue LTV to gross-profit LTV.
Worked example: $80 order × 4 orders/year × 3 years = $960 revenue LTV; at a 50% margin, gross-profit LTV is $480. That $480, not $960, is the figure to set against CAC. See the LTV deep dive and CLV modeling for cohort-based methods.
Why honest LTV is the number that sets your budget
Lifetime value is the ceiling on what you can afford to acquire a customer, so getting it wrong corrupts every downstream decision. Overstate LTV and you bless channels that lose money; understate it and you starve growth that would have paid off. The discipline that separates the two is margin: revenue LTV measures sales, gross-profit LTV measures what you keep, and only the second can responsibly set a CAC ceiling. A budget built on revenue LTV is a budget built on money you never actually had.
The model rewards the inputs you can change. Lifespan responds to retention work, frequency to lifecycle marketing and replenishment, order value to bundling and pricing, and margin to sourcing and mix. Because the four multiply, a modest gain in two of them compounds — lift frequency 20% and lifespan 20% and LTV climbs 44%, not 40%. That multiplicative structure is why the strongest growth teams treat LTV as a product and retention problem, not only an acquisition one.
The simple formula here is a starting point, not the last word. It assumes steady spending and a clean cutoff for lifespan, while real customers spend unevenly and churn on a curve. For high-stakes models, cohort-based and predictive LTV methods give a truer picture by following actual retention rather than a single average. Use this tool for fast, defensible estimates and a planning anchor; reach for cohort analysis when the decision is large enough to justify it.
What moves LTV the most
There is no benchmark LTV — it is entirely specific to your prices, margins, and retention. What is portable is knowing which lever pays off, since the four inputs multiply rather than add.
| Lever | Input it moves | Why it compounds |
|---|---|---|
| Retention / churn | Customer lifespan | Each saved year multiplies all spending |
| Lifecycle & replenishment | Purchase frequency | More orders across the same lifespan |
| Bundling & pricing | Average order value | Higher value on every single order |
| Sourcing & mix | Gross margin | Keeps more of every revenue dollar |
What operators say about lifetime value
The companies that compound treat lifetime value as something to build, not just measure — retention is the engine, acquisition is only the spark.
Measure the value a customer actually delivers over time, not the revenue you hope they represent on the day they sign up.