Customer Lifetime Value Calculator
Customer lifetime value tells you what a customer is worth across every order they place — not just the first one. Enter your average order value, how often people buy and how long they stay to see LTV in revenue and in contribution profit.
Net revenue per order, before variable costs.
Orders the average customer places in a year.
Share of net revenue left after variable costs.
Total acquisition spend ÷ new customers.
Across 4.8 orders, this customer leaves €99.84 behind after variable costs.
- Revenue LTV
- €312.00
- Contribution per order
- €20.80
- Net LTV after acquisition
- €71.84
- LTV : CAC (contribution)
- 3.57×
- Acquisition paid back after
- 1.3 orders (~7 months)
- Share of LTV spent on acquisition
- 28.0%
How we calculated this
Revenue LTV = €65.00 × 4.8 orders = €312.00. Contribution LTV applies your contribution margin to that revenue, and net LTV subtracts the acquisition cost once, at the start of the relationship. Figures are VAT-exclusive and exclude fixed costs such as salaries, software and rent.
What is customer lifetime value?
Customer lifetime value (LTV, sometimes CLV) is the total value a customer generates for your store over the whole relationship. Most stores acquire customers at a loss on the first order and only become profitable on the repeat purchases, so LTV is what decides whether your acquisition spend is an investment or a leak.
How is customer lifetime value calculated?
Revenue LTV = average order value × purchases per year × customer lifespan (years)
Contribution LTV = revenue LTV × contribution margin %
Net LTV = contribution LTV − customer acquisition cost
Use a VAT-exclusive average order value. Contribution margin should already account for product cost, shipping, packaging, payment fees and other variable costs — the contribution margin calculator works it out from a single order.
Example
A store with a €65 average order value, 2.4 orders per year and a two-year customer lifespan generates €312 of revenue LTV across 4.8 orders. At a 32% contribution margin, that is €99.84 of contribution LTV. Spending €28 to acquire the customer leaves €71.84 of net lifetime contribution — and the acquisition cost is repaid inside the second order.
Why this matters for ecommerce stores
LTV sets the ceiling on what you can afford to pay for a customer. If you only measure first-order profitability, you will underspend on channels that build repeat buyers; if you measure LTV on revenue instead of contribution, you will overspend on everything. The honest version sits in between, and it moves whenever your margin, repeat rate or discounting changes — which is why it is worth recalculating rather than fixing once in a spreadsheet.
Frequently asked questions
- How do you calculate customer lifetime value?
- Revenue LTV = average order value × purchases per year × customer lifespan in years. That figure is useful for context, but it is not money you keep. Multiplying it by your contribution margin gives contribution LTV: what the customer leaves behind after VAT, product cost, shipping, packaging and payment fees.
- Should LTV be based on revenue or profit?
- Profit. Acquisition decisions made on revenue LTV consistently overpay, because they treat money owed to suppliers, carriers, payment providers and the tax authority as if it were yours. Use contribution LTV when you set a target CPA or judge an acquisition channel.
- What is a good LTV to CAC ratio?
- The commonly quoted 3:1 rule comes from subscription software, not ecommerce, and it assumes a gross-margin LTV over several years. What matters more is whether your payback happens fast enough for your cash position: a 3:1 ratio spread over three years can still bankrupt a store that pays for inventory and ads up front.
- How do I estimate customer lifespan?
- Look at how long ago your repeat customers last ordered. A practical approximation is the period after which a cohort effectively stops reordering — for many stores that is 12 to 24 months. If you have no repeat data yet, model one year and treat the result as a floor rather than a forecast.
- Does LTV include VAT?
- It should not. If your average order value includes VAT, remove it before calculating, or use the VAT-exclusive AOV. VAT is collected on behalf of the tax authority and never contributes to lifetime value.
Stop estimating your lifetime value.
Connect Shopify and ProfitSimple calculates contribution profit per order from your real orders and costs, so your LTV is based on your numbers instead of assumptions.
Connect ShopifyRelated calculators
- Target CPA Calculator — the most you can pay per customer
- Contribution Margin Calculator — what's left per sale after variable costs
- Ecommerce Profit Calculator — your store's contribution profit for a period
- All free ecommerce calculators