Marketing
Customer LTV Calculator
Estimate customer lifetime revenue from average purchase value, annual purchase frequency, and customer lifespan.
Enter your values
Average revenue received from one customer purchase.
Average number of orders placed by one customer each year.
Average number of years a customer remains active.
Results
Estimated customer lifetime value
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Enter purchase value, frequency, and lifespan to estimate revenue LTV.
Annual customer revenue
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Average purchase value multiplied by purchases per year.
Lifetime purchases
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Estimated purchases across the customer lifespan.
Results are estimates based on the values entered and are provided for general planning.
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Step by step
How to use the LTV
- Enter the Average purchase value per order.
- Enter Purchases per year for a typical customer.
- Enter the Average customer lifespan in years.
- Read the estimated lifetime revenue, the annual revenue per customer, and the lifetime purchase count.
Method
How to calculate LTV
This calculator estimates customer lifetime revenue by multiplying average purchase value by purchases per year and average customer lifespan.
Formula
Estimated customer lifetime value = Average purchase value × Purchases per year × Customer lifespan
Assumptions
- This is a simple lifespan-based revenue LTV model, not a profit or churn-rate model.
- Average purchase value, frequency, and lifespan remain representative over the relationship.
- Purchase frequency is annual and customer lifespan is measured in years.
Multiplication retains full numeric precision. Currency displays two decimals.
How to interpret the result
This calculator estimates customer lifetime revenue. It does not automatically subtract product costs, acquisition costs, servicing costs, overhead, or other business expenses. It must not be interpreted as lifetime profit.
Worked example: a monthly subscription
A customer pays $29 per month, so the average purchase value is $29 with 12 purchases per year, giving $348 of annual revenue. If customers stay 2.5 years on average, that is 30 purchases and an estimated revenue LTV of $870. Use your own retention data for lifespan rather than a hoped-for figure.
When to use it: setting an acquisition ceiling
Compare LTV with what you pay to win a customer. If the $870 customer above costs $300 to acquire, revenue covers that cost almost three times over before product costs. Calculate LTV separately for groups such as monthly and annual plans, since one average can hide very different customers.
What this customer LTV estimate includes
The calculator first estimates annual customer revenue from average purchase value and purchase frequency. It then multiplies that amount by customer lifespan to estimate lifetime revenue.
Use averages from the same customer cohort whenever possible. Mixing order value from high-value customers with lifespan from the whole customer base can produce an estimate that does not represent either group.
How to use LTV in acquisition decisions
Compare revenue LTV with CAC carefully: revenue does not equal profit and still needs to cover product, servicing, overhead, and acquisition costs. Also consider payback timing because equal lifetime revenue can arrive at very different speeds.
Recalculate LTV when pricing, purchase frequency, margin, or retention changes. Scenario analysis is more informative than treating one estimate as a permanent customer value.
Customer value measures compared
This calculator reports revenue-based customer value and keeps it distinct from profit-based measures.
| Measure | Formula | What it shows |
|---|---|---|
| Annual revenue | Average order value × Purchases per year | Expected customer revenue during one year. |
| Lifetime purchases | Purchases per year × Customer lifespan | Estimated number of purchases over the relationship. |
| Estimated LTV | Annual revenue × Customer lifespan | Estimated lifetime revenue before business costs. |
Frequently asked questions
Which calculator do you need?
- Need the acquisition cost to compare against this value? Use the CAC Calculator.
- Want the ratio that shows whether acquisition is sustainable? Try the LTV:CAC Ratio Calculator.
Keep calculating
Related calculators
Use the CAC calculator to compare acquisition spend with customer revenue carefully, and use ROAS to examine the revenue efficiency of advertising.