Customer Lifetime Value
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Simple model based on average order value — doesn't account for cohort churn curves or gross margin. Use as a directional benchmark.
Free LTV Calculator
Find your customer lifetime value (LTV/CLV).
LTV matters most when compared against CAC (Customer Acquisition Cost) — a common rule of thumb is targeting an LTV:CAC ratio of at least 3:1, meaning each customer is worth at least 3x what it costs to acquire them. This simple model uses average order value, not a cohort-based retention curve, so treat it as a directional estimate.
Worked Example
Example: Average order value $50, customers purchase 4 times/year, average customer relationship lasts 3 years. LTV = $50 × 4 × 3 = $600.
Formula
LTV = Average Order Value × Purchase Frequency (per year) × Average Customer Lifespan (years)
Frequently Asked Questions
What LTV:CAC ratio should I target?
A commonly cited benchmark is 3:1 or higher — LTV should be at least 3x your customer acquisition cost for a healthy, scalable business.
Should this be gross revenue or margin?
This simple model uses revenue (average order value). For a profit-based LTV, multiply the result by your average gross margin %.