Customer LTV Calculator

Customer lifetime value is arguably the most important metric for any DTC or eCommerce brand. It tells you exactly how much a customer is worth, which determines how much you can afford to spend to acquire them.

Start with your average order value and purchase frequency (how many times a customer buys per year). Multiply by customer lifespan in years to get gross LTV. For subscription brands, lifespan is the average subscription length.

Adding your gross margin percentage converts gross LTV into net LTV, reflecting the actual profit from each customer relationship. This is the number that matters when comparing against acquisition costs.

The LTV:CAC ratio is the gold standard metric for growth efficiency. A 3:1 ratio or better means your business model is sustainable. The payback period shows how quickly you recover your customer acquisition investment.