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Customer Lifetime Value Calculator

Customer Lifetime Value (LTV or CLV) estimates the total revenue and profit a single customer will generate over their relationship with your business. Comparing LTV to CAC reveals whether your acquisition economics are sustainable.

VAT-registered? Use your ex-VAT order value — LTV should reflect revenue you keep, not the VAT you pass to HMRC.

How it's calculated

Gross LTV = Avg order value × Purchase frequency × Customer lifespan
Net LTV = Gross LTV × Gross margin %

Frequently Asked Questions

What is a healthy LTV:CAC ratio?
A ratio of 3:1 (LTV is 3× CAC) is the widely cited benchmark for a sustainable business. Below 1:1, you spend more to acquire customers than they generate. Above 5:1, you may be underinvesting in growth.
How do I calculate average customer lifespan?
Divide 1 by your churn rate. For example, if 20% of customers leave each year (20% annual churn), average lifespan = 1 ÷ 0.20 = 5 years. CRM data or cohort analysis can provide this figure.
Should I use gross or net LTV for decisions?
Use net LTV (after applying gross margin) when comparing to CAC, as CAC is a cost figure. Gross LTV is useful for understanding revenue capacity. Neither accounts for the cost of serving customers beyond COGS.
Should average order value include VAT?
If you are VAT-registered, use the ex-VAT order value. Store and analytics tools usually report VAT-inclusive figures, but the VAT belongs to HMRC — so including it overstates both gross and net LTV, and the LTV:CAC ratio you then compare against CAC, which is already a cost figure.