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LTV Calculator
Estimate customer lifetime value and your max CAC.
Customer lifetime value (LTV) calculator
Customer lifetime value is the total profit an average customer generates over the time they buy from you — the single most important number for deciding how much you can spend to acquire one. Enter your average order value, how often customers buy per year, how many years they stay, and your gross margin to get LTV, lifetime revenue, and a suggested maximum customer acquisition cost.
LTV = AOV × orders per year × lifespan × gross margin. We also show a conservative max CAC at a 3:1 LTV-to-CAC ratio — the healthy target most ecommerce operators use. Combine it with the Break-Even ROAS calculator to turn that ceiling into an ad-spend target.
Frequently asked questions
How is customer lifetime value calculated?
LTV = average order value × purchases per year × customer lifespan (years) × gross margin %. It estimates the total profit a customer generates over their relationship with your store.
How does LTV set my maximum CAC?
Your customer acquisition cost should stay below your LTV. A common rule of thumb is to keep CAC at or under one-third of LTV (an LTV:CAC ratio of 3:1) for a healthy, scalable business.
Why use gross margin in the LTV formula?
Revenue isn’t profit. Multiplying by gross margin turns lifetime revenue into lifetime profit — the number that actually funds acquisition and overhead.