Business Metrics
Customer Lifetime Value Calculator
Estimate the lifetime gross profit generated by an average customer using purchase value, purchase frequency, customer lifespan, and gross margin.
Customer Lifetime Value Calculator
Estimate how much gross profit an average customer generates over the expected customer relationship.
Estimated Customer Value
Estimated lifetime gross profit per customer
Formula
LTV = Average Purchase Value × Purchases Per Year × Customer Lifespan × Gross Margin
Continue the workflow
Carry your average order value and gross margin into the Marketing & Customer Growth Kit’s campaign planner to model acquisition spend against customer value together.
Next step
Connect sales metrics to a revenue plan
Bring revenue growth, order value, conversion, acquisition cost, and customer value into a shared planning workflow.
01
Calculate
Start with a focused business question and get a clear estimate.
02
Compare
Move from one answer to multiple assumptions and scenarios.
03
Plan
Save useful scenarios in your workspace and build on them later.
What is Customer Lifetime Value?
Customer Lifetime Value, commonly called LTV or CLV, is an estimate of the economic value a customer generates over the expected length of the customer relationship.
How to Calculate LTV
A simple gross-profit-based LTV calculation multiplies the average purchase value by purchase frequency and expected customer lifespan, then applies the gross margin.
LTV and Customer Acquisition Cost
LTV is often analyzed alongside Customer Acquisition Cost. CAC measures acquisition spending per new customer, while LTV estimates the value generated over the customer relationship.
Related Business Metrics
Example
Suppose a customer spends $100 per purchase, purchases four times per year, remains a customer for three years, and the business has a 60% gross margin. Annual revenue per customer would be $400 and lifetime revenue would be $1,200. Applying the 60% gross margin produces an estimated lifetime gross profit of $720.
Frequently Asked Questions
What does LTV stand for?
LTV stands for Customer Lifetime Value. It estimates the economic value generated by a customer over the expected customer relationship.
What is the difference between LTV and CLV?
LTV and CLV are commonly used interchangeably for Customer Lifetime Value.
Should LTV use revenue or profit?
Revenue-based LTV measures customer revenue, while profit-based LTV accounts for gross margin. This calculator uses gross margin so the result represents estimated lifetime gross profit.