How do you use the LTV calculator?
Enter three numbers about your customers, plus your margin if you want profit. The calculator shows lifetime revenue and lifetime profit per customer.
- Average order value. Total revenue divided by the number of orders, over a recent period.
- Orders per customer per year. Total orders divided by the number of unique customers over a year.
- Years as a customer. How long a typical customer keeps ordering.
- Optional: margin, in percent. Use contribution margin (price minus all variable costs per order, as a share of price) if you know it. The contribution margin calculator works it out.
- Copy the page link to share the result. Only the numbers are stored in it.
What is the LTV formula?
LTV is average order value times purchase frequency times customer lifespan. Shopify's guide gives this formula, with a margin-adjusted version that multiplies the result by gross margin.
LTV (revenue) = average order value × orders per year × years as a customer
LTV (profit) = LTV (revenue) × margin
The Amazon Ads "Ads Math" guide uses the same structure in short form: average order value times average orders equals customer LTV.
This is a simple historical formula. It does not discount future orders or predict churn, which keeps it easy to check by hand.
Where do you find the inputs?
Your store's order export has everything the formula needs. Use one recent year, so the numbers reflect what customers do now.
| Input | How to work it out | Example source |
|---|---|---|
| Average order value | Revenue ÷ number of orders | Store analytics or order export |
| Orders per year | Orders ÷ unique customers, over 12 months | Order export, counted by customer email or ID |
| Years as a customer | How long past customers kept ordering | An older group of customers, followed forward |
Shopify's guide uses the same definitions: purchase frequency as orders divided by unique customers over the same period.
Worked example
Enter these numbers in the calculator above (example numbers, in any currency):
| Input | Value |
|---|---|
| Average order value | 60 |
| Orders per year | 3 |
| Years as a customer | 2 |
| Margin | 40 percent |
The tool shows the same results:
| Output | Working | Result |
|---|---|---|
| Lifetime revenue | 60 × 3 × 2 | 360 |
| Lifetime profit | 360 × 0.40 | 144 |
The profit figure is the one to use for ad decisions. In this example, a new customer is worth 144 in margin over two years, compared with 24 in margin on the first order alone (60 × 0.40).
How does LTV change what you can pay for a customer?
LTV sets the upper limit on customer acquisition cost. If a customer brings in 144 of margin over their lifetime, spending more than 144 to acquire them loses money even before fixed costs.
The first-order view is much tighter. At an average order of 60 and a 0.40 margin, a brand that only looks at the first order can pay up to 24 per order to break even (the CPA calculator works out this limit for your own numbers); a brand that trusts its repeat rate can pay more, and get the difference back over later orders. How much of that gap to spend is a cash-flow decision: you pay the ad cost today and collect the repeat orders later.
Compare lifetime profit with your CAC, the cost of winning one new customer. The ad metrics calculator shows the first-order numbers next to each other.
What are the limits of this calculator?
The formula multiplies three averages. The result is only as good as those averages.
- Averages hide groups. A few frequent buyers can lift the average order count. If you can, run the calculator per product or per acquisition channel.
- No discounting. A sale two years from now counts the same as one today. For long lifespans, this overstates the value.
- New brands guess. Without order history, years as a customer is an estimate. Label it as one in any report.
- Margin choice matters. Gross margin leaves out shipping and payment fees; contribution margin includes them. Use the same one everywhere you compare.
- No benchmarks. The tool shows no "good" LTV or LTV to CAC ratio, because both depend on your category and cash position.
Related tools and glossary entries
See the LTV glossary entry, with links to CAC and contribution margin. The CAC calculator gives the other side of the LTV to CAC comparison. All free tools are on the tools page.
If you want more ad creative to bring in customers at a lower cost, see how Anglr works for brands.
Glossary: LTV · CAC · Contribution margin
FAQ
How do you calculate customer lifetime value?
Multiply average order value by the number of orders a customer places per year and by the number of years they stay a customer. Multiply by your margin to turn revenue into profit.
Should LTV use revenue or profit?
Use profit when you compare LTV with acquisition cost. Revenue LTV includes the cost of the products, shipping and fees, so comparing it with CAC overstates how much you can spend to win a customer.
What is the difference between LTV and CLV?
None in practice. LTV, CLV and CLTV are all short names for customer lifetime value.
How do I estimate how many years a customer stays?
Use your own order history: look at customers from an older cohort and count how long they kept ordering. If you have no history yet, use a short, cautious figure and update it as data comes in.
Is this a loan-to-value calculator?
No. LTV also stands for loan-to-value in lending. This calculator measures customer lifetime value for ecommerce and ad spend decisions.
Sources
Checked: 12 Oct 2026