LTV Calculator
Enter your average order value, purchase frequency, customer lifespan, and gross margin to get customer lifetime value. Add your CAC to see the LTV:CAC ratio and the most you can pay per customer.
Average revenue per purchase.
How often a customer buys in a year.
How long they keep buying.
Margin and acquisition cost
After product and fulfillment costs.
What you pay to win one customer.
Customer lifetime value
$720
$60 × 4 per year × 3 years = $720 in revenue
- Revenue per year
- $240
- Margin-adjusted LTV
- $360
- LTV : CAC
- 4 : 1
- Max CAC at 3 : 1
- $120
- CAC payback
- 9 months
- Gross profit per order
- $30
LTV by customer lifespan
Same order value and frequency, different retention.
| Lifespan | Revenue LTV | Margin LTV | Max CAC at 3 : 1 |
|---|---|---|---|
| 1 year | $240 | $120 | $40 |
| 2 years | $480 | $240 | $80 |
| 3 yearsyours | $720 | $360 | $120 |
| 4 years | $960 | $480 | $160 |
| 5 years | $1,200 | $600 | $200 |
Works for e-commerce, subscriptions, and services. Free, instant, no sign-up.
How to calculate LTV
Lifetime value multiplies what a customer spends per order, how often they order, and how long they stay. Margin turns it into profit, and CAC turns it into a ratio you can act on.
Lifetime value
LTV = AOV × Purchases per year × Years
$60 × 4 × 3 = $720
The revenue an average customer brings over their relationship with you.
Margin-adjusted LTV
Margin LTV = LTV × Gross margin
$720 × 50% = $360
The profit version, which is the number to compare with what you pay to acquire a customer.
LTV to CAC ratio
Ratio = Margin LTV ÷ CAC
$360 ÷ $90 = 4 : 1
How many times a customer pays back their acquisition cost. 3:1 is the common rule of thumb.
Worked example
A customer spends $60 per order, buys 4 times a year, and stays for 3 years: $720 of revenue, or $360 of gross profit at a 50% margin. If it costs $90 to acquire them, the LTV:CAC ratio is 4:1, the most you could pay at 3:1 is $120, and the $90 is paid back in 9 months.
What is customer lifetime value?
Customer lifetime value is the total revenue, or profit, an average customer generates over the whole time they buy from you. It matters because it sets the ceiling on what you can afford to spend acquiring a customer. Judge ads by first-order profit alone and you will underbid for customers who come back for years; judge by LTV and you can outspend competitors for the same people and still make money.
The simple formula in this calculator multiplies three things you can read from your order history: average order value, purchase frequency, and how long customers keep buying. Gross margin turns revenue into profit, and your customer acquisition cost turns the result into the LTV:CAC ratio and a payback period.
LTV is not one number for the whole business. Customers acquired from different channels, creatives, or products often have very different lifetimes, which is why connecting ad performance to repeat purchases is worth the effort: it tells you which campaigns bring the customers worth paying more for.
Reading the ratio
Below 1 : 1
You lose money on every customer, even over their whole lifetime. Fix margin, retention, or acquisition cost before scaling.
1 : 1 to 3 : 1
Profitable but thin. Payback may be long, so watch cash flow and look for retention and order-value gains.
Around 3 : 1
The common rule of thumb for a healthy balance between growth spend and profit.
Well above 3 : 1
Often a sign you could grow faster by spending more to acquire customers, as long as payback stays short.
Payback period
Months to recover CAC from gross profit. Shorter payback lets you reinvest sooner regardless of the ratio.
How to increase lifetime value
LTV rises when customers spend more per order, buy more often, or stay longer, and when you acquire the kind of customers who do all three.
Acquire customers who come back
Build campaigns from the audiences and creatives that have produced repeat buyers, not just first orders.
AI Campaign BuilderRe-engage existing customers
Generate fresh creative for retention and cross-sell campaigns without a new production cycle.
AI Image AdsSee which creatives bring loyal customers
Analyze performance by creative, hook, and audience to find the combinations that drive lifetime value.
AI InsightsKeep optimizing after the sale
Let the AI media buyer shift budget toward the campaigns producing the most valuable customers.
AI Media BuyerLTV Calculator FAQ
More free tools
Acquire customers worth acquiring
AdStellar's AI builds Meta campaigns from your own performance data, finds the audiences that stick around, and optimizes toward the results that drive lifetime value.