Know what a customer is actually worth before buying traffic.
Calculate customer lifetime value from order value, purchase frequency, lifespan, and gross margin. Then compare it against CAC so you know whether growth is profitable or just expensive.
Customer lifetime value calculator
Enter your customer economics. Results update as you type.
What LTV really measures
Customer lifetime value estimates how much revenue and gross profit one customer generates before they churn. It converts messy retention, purchase behavior, and margin into one decision number.
Use the 3:1 CAC rule
If a customer creates $900 in lifetime gross profit, a rough acquisition ceiling is $300. Below that you have room to scale; above it, growth gets expensive fast.
Best levers to improve LTV
- Increase average order value with bundles
- Improve purchase frequency with email/SMS
- Reduce churn with onboarding and support
- Raise gross margin before buying more traffic
How to use this LTV calculator
Start with conservative numbers. Average order value should reflect real paid orders, not best-case bundles. Purchase frequency should be annual purchases per customer, not total store order count. Customer lifespan should reflect how long buyers keep purchasing before they naturally disappear. Gross margin should include product cost, fulfillment, payment fees, and direct service delivery cost.
The calculator follows the source ProfitToolsLab formula exactly: annual value equals average order value multiplied by purchase frequency; lifetime revenue equals annual value multiplied by customer lifespan; lifetime gross profit equals lifetime revenue multiplied by gross margin; max CAC equals lifetime gross profit divided by three.
Use the output as a decision boundary. If your paid channel CAC is above the max reasonable CAC, do not blindly scale. Improve retention, increase AOV, or lower acquisition cost first. If CAC is well below the ceiling and lead quality is stable, you probably have permission to test more budget.
For better planning, rerun the calculator with pessimistic, expected, and optimistic inputs. The spread between those three scenarios is usually more useful than pretending a single forecast is gospel.
Small changes compound fast, so save a baseline before changing offers, prices, automations, or ad budgets.
Need better retention or lifecycle marketing?
LTV gets bigger when customers buy again, stick around longer, and cost less to serve. Email and CRM tools can help segment customers, automate follow-up, and recover repeat purchases.