LTV Calculator
Estimate how much revenue a customer brings in over their lifetime and whether your acquisition cost leaves room to grow.
- LTV
- $900.00
- LTV:CAC
- 7.50:1
- Payback days
- ~146
- Annual value
- $300.00
LTV:CAC ≥ 3 - healthy unit economics
Growth scenarios
New LTV: $990.00 (+10.0%)
New LTV: $1,035.00 (+15.0%)
LTV Summary ─────────── AOV: $75.00 Purchases/year: 4 Customer lifespan: 3 years LTV: $900.00 CAC: $120.00 LTV:CAC ratio: 7.50:1 Payback period: ~146 days Status: Healthy unit economics
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What it does
Lifetime value tells you the ceiling on what a customer is worth, which is the number you need before setting a cost-per-acquisition target. This calculator uses the simple revenue model: average order value times purchases per year times years as a customer. Add CAC and it shows the LTV:CAC ratio and roughly how many days of purchases it takes to earn the acquisition cost back.
The growth scenarios show what a percentage lift in order value or in purchase frequency would do to LTV, which helps when deciding between an upsell project and a retention campaign. A plain-text summary is ready to copy into a plan or investor note.
How to use it
- 1
Enter Average order value ($), Purchases per year and Customer lifespan (years).
- 2
Enter CAC, customer acquisition cost ($).
- 3
Read LTV, LTV:CAC, Payback days and Annual value, and the status line.
- 4
Under Growth scenarios, set Increase AOV by (%) and Increase frequency by (%) to see each new LTV and its percentage change.
- 5
Click Copy summary to take the text summary with you.
What you get
LTV in dollars, LTV:CAC ratio, approximate payback in days, annual value per customer, two scenario LTVs, and a copyable text summary with a status line.
When to use it
- Setting a max CAC target
- Enter your LTV inputs and adjust CAC until the ratio reaches the level you are comfortable with.
- Upsell versus retention
- Compare the new LTV from a 10% order value increase with a 15% frequency increase side by side.
- Explaining payback to a team
- Use the payback days figure to show how long cash is tied up in each new customer.
- Writing a growth plan
- Copy the LTV summary with inputs, ratio, payback and status into a document.
Example
Input
AOV $75, 4 purchases per year, 3-year lifespan, CAC $120, AOV +10%, frequency +15%
Output
LTV $900.00, LTV:CAC 7.50:1, payback ~146 days, annual value $300.00. Scenarios: $990.00 (+10.0%) and $1,035.00 (+15.0%).
LTV = 75 x 4 x 3. Payback = 120 / 300 x 365, rounded up. The ratio is above 3, so the status reads healthy unit economics.
Tips
- This is revenue LTV. To judge what you can afford on ads, multiply LTV by your gross margin first, or the ratio will look better than your cash flow.
- Base lifespan on how long customers actually keep buying in your data, not on how long they stay on your email list.
- The status uses the tool's 3:1 and 2:1 lines; a business with fast payback can operate below 3:1, while one with slow payback may need more.
- Run the calculation per acquisition channel if you can, since customers from different channels often repeat at different rates.
Questions
How is customer lifetime value calculated here?
Average order value multiplied by purchases per year multiplied by customer lifespan in years. $75 x 4 x 3 gives an LTV of $900.
What does the payback days figure mean?
It is how long a customer takes to generate revenue equal to CAC, based on their annual value spread over 365 days. It uses revenue, not profit.
Should I use revenue or profit for LTV?
For setting ad budgets, profit is safer. The tool calculates revenue LTV, so multiply the result by your gross margin before comparing it with CAC for a stricter view.
Is it better to raise order value or purchase frequency?
In this model both change LTV by the same percentage, so the scenarios show which lift is more realistic for you to achieve, not which is mathematically stronger.