Lifetime Value Calculator

Use this lifetime value calculator to estimate how much revenue a typical customer generates over the full length of their relationship with your business. Enter your average purchase value, average number of purchases per year and average customer lifespan to get an instant result.

Customer lifetime value, often called LTV or CLV, is one of the most useful metrics for marketers, founders and e-commerce businesses because it helps you understand how much a customer is worth over time.

What is lifetime value?

Lifetime value is the total revenue you expect to earn from an average customer during the entire period they stay with your business.

A simple LTV calculation helps you estimate:

• how valuable each customer is
• how much you can afford to spend on acquisition
• whether your business model is sustainable
• how retention affects long-term revenue

Lifetime value formula

A basic lifetime value formula is:

Lifetime Value = Average Purchase Value × Average Purchases Per Year × Average Customer Lifespan

For example, if:

• average purchase value = £50
• average purchases per year = 4
• average customer lifespan = 3 years

Then:

LTV = £50 × 4 × 3 = £600

That means the estimated lifetime value of one average customer is £600.

How to use this lifetime value calculator

1. Enter your average purchase value.
2. Enter your average purchases per year.
3. Enter your average customer lifespan in years.
4. The calculator updates instantly and shows:
   • estimated lifetime value
   • annual customer value
   • monthly average value

Use the Reset button to clear the fields and start again.

Why lifetime value matters

Lifetime value is important because it gives you a longer-term view of performance. Instead of only looking at the first sale, LTV helps you understand the full value of retaining a customer.

This is especially useful when comparing LTV with customer acquisition cost.

For example:

• if CAC = £40
• and LTV = £600

that generally suggests a much healthier business than if acquisition costs are close to, or above, the total value generated by a customer.

Example lifetime value calculations

Example 1: E-commerce store

An online shop has:

• average order value: £35
• purchases per year: 6
• customer lifespan: 2 years

LTV = £35 × 6 × 2 = £420

Example 2: Subscription business

A subscription brand sees:

• average annual customer revenue: based on £20 per month
• equivalent annual purchase value: £240
• customer lifespan: 3 years

LTV = £240 × 3 = £720

Example 3: Service business

A business has:

• average purchase value: £120
• average purchases per year: 2
• customer lifespan: 5 years

LTV = £120 × 2 × 5 = £1,200

LTV vs CAC

LTV and CAC are often analysed together:

• LTV tells you how much a customer is worth
• CAC tells you how much it costs to acquire that customer

If LTV is much higher than CAC, your business is usually in a stronger position to scale. If CAC is too high relative to LTV, profitability can become difficult.

What is a good lifetime value?

There is no single ideal LTV for every business. It depends on:

• your pricing
• your margins
• your retention rate
• how often customers buy
• your acquisition costs

In general, businesses try to increase LTV by improving repeat purchases, retention and average order value.

How to improve lifetime value

Ways to improve customer lifetime value include:

• increasing average order value
• encouraging repeat purchases
• improving retention
• offering subscriptions or bundles
• improving customer service
• cross-selling and upselling relevant products
• building stronger customer loyalty

Even modest gains in retention can have a strong impact on LTV.

Frequently asked questions

How do you calculate lifetime value?

A simple lifetime value calculation multiplies average purchase value by average purchases per year and average customer lifespan.

What is the difference between LTV and CLV?

LTV and CLV are often used interchangeably. Both refer to customer lifetime value.

Is lifetime value revenue or profit?

This calculator estimates revenue-based lifetime value. A more advanced version can include gross margin to estimate profit-based lifetime value.

Why is lifetime value useful?

It helps businesses understand customer worth over time, set acquisition budgets and make better decisions about retention and marketing.

Can LTV be used with CAC?

Yes. Comparing LTV with CAC is one of the most common ways to assess whether customer acquisition is financially sustainable.

What if my customers buy irregularly?

Use your best average estimate for annual purchase frequency. The calculator is designed to provide a practical LTV estimate rather than a perfect forecast.

Check out our other calculators:
ROI
Conversion Rate
Customer Acquisition Cost