E-commerce Customer Lifetime Value Calculator

Calculate customer lifetime value (CLV/LTV), gross profit LTV, and the vital LTV:CAC ratio based on repeat purchase frequency, AOV, and customer lifespan.

LTV & Unit Economics Health
Gross Profit LTV
$315.00
LTV : CAC Ratio
9.8 : 1

Healthy (>3.0x recommended)

Cumulative Revenue LTV
$630.00
Net Profit after CAC
$283.00

Customer Lifetime Value Formula

Annual Value = AOV × Purchase Frequency; Revenue LTV = Annual Value × Lifespan; Profit LTV = Revenue LTV × Gross Margin %; Ratio = Profit LTV / CAC
  • Average Order Value (AOV): Average dollar amount spent per purchase.
  • Purchase Frequency: Number of orders an average customer places per calendar year.
  • Customer Lifespan: Average number of years a customer continues buying before churning.
  • Gross Profit LTV: Actual gross profit dollars generated by a customer over their entire relationship.
  • LTV:CAC Ratio: Compares customer profit lifetime value against the cost to acquire them (target is 3:1 or higher).

Step-by-Step Worked Example

Scenario:

Calculation Steps:

    Result:

    How to Use This Calculator

      Assumptions & Limitations

      • Does not represent a guarantee of future customer retention.
      • Excludes inflation adjustment on future cash flows.

      Frequently Asked Questions

      Why is Gross Profit LTV better than Revenue LTV?

      Revenue LTV ignores product manufacturing and shipping costs. A customer generating $500 in revenue with a 20% margin only produces $100 in profit, making an $80 CAC barely viable.

      What is a healthy LTV to CAC ratio for e-commerce?

      A 3:1 ratio is widely regarded as the gold standard in direct-to-consumer e-commerce. A 1:1 ratio means you are breaking even on customers, while a 5:1+ ratio indicates you could aggressively scale ad spend.

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