Free calculator
LTV calculator
Enter how much customers spend, how often they buy and for how long. You get lifetime value in revenue and in gross profit, your LTV:CAC ratio, and how long a customer takes to pay back what you spent to win them.
Results Example figures. Change any field.
LTV (gross profit)
LTV (revenue)
LTV:CAC
CAC payback
The formula
How it’s calculated.
LTV = order value × orders per year × years as a customer × gross margin
Worked example
A customer who spends $80 an order, 2.5 times a year, for 3 years brings in 80 × 2.5 × 3 = $600 of revenue. At a 55% gross margin that is $330 of gross profit. Against a $100 CAC, LTV:CAC is 3.3:1, and at $9.17 of gross profit a month the CAC is earned back in 10.9 months.
Use gross-profit LTV. Not revenue.
Revenue LTV makes every customer look more valuable than they are. A $600 customer at a 55% margin leaves $330 to cover what you paid to acquire them.
Compare CAC with gross-profit LTV, never with revenue.
Where the inputs come from.
Average order value and margin are in Shopify. Purchase frequency and lifespan come from cohorts: group customers by the month of their first order and track how many orders each group places over the next 12 to 24 months.
Upstack Attribution reports LTV and new-customer CAC from the same Shopify orders.
See how Upstack Attribution reports it →More calculators
Related calculators.
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CAC calculator
Paid and fully loaded CAC, and how many orders it takes to earn it back.
CAC = (ad spend + other acquisition costs) ÷ new customers
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CPA calculator
Cost per order, cost per new customer, and the most an order lets you pay.
CPA = ad spend ÷ orders
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Contribution margin calculator
CM1 to CM4 in dollars and as a share of net revenue.
CM3 = net revenue − product costs − shipping, fulfillment and fees − marketing
Questions
LTV questions.
How do you calculate customer lifetime value?
Multiply average order value by orders per year and by the number of years a customer keeps buying. Multiply that by gross margin to get LTV in gross profit, which is the version to compare with CAC.
What is a good LTV to CAC ratio?
3:1 is the common rule of thumb: a customer’s lifetime gross profit should be about three times what it cost to acquire them. Below 1:1 you lose money on every customer you win.
How do you calculate CAC payback?
Divide CAC by the gross profit a customer brings in each month. A $100 CAC against $9.17 of monthly gross profit pays back in about 11 months.
Should LTV use revenue or profit?
Profit. Revenue LTV ignores what each order costs you, so comparing it with CAC overstates how much you can afford to spend.
Get these numbers from your own store.
Upstack Attribution reports ROAS, MER, new-customer CAC, LTV and CM1 to CM4, reconciled against the revenue in Shopify.
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