AOV & LTV Calculator
Estimate the total revenue and profit one customer brings over their lifetime. Use the result as your maximum profitable CPA when planning new-customer acquisition.
Inputs
Use 90-day or 12-month historical numbers if you have them.
Total orders ÷ unique customers ÷ years.
Add to also see profit-based LTV — your real CPA ceiling.
Customer Lifetime Value (revenue)
Average customer buys 2.5 times per year for 2 years at $60.00 per order. Use the gross-LTV figure as your max sustainable CPA to remain profitable across a customer's full lifetime.
- Average order value (AOV)
- $60.00
- Purchase frequency
- 2.5 / year
- Customer lifespan
- 2 years
- Gross-profit LTV
- $180.00
Use this as your CPA ceiling for new customers.
How it's calculated
The simple LTV formula:
LTV (revenue) = AOV × Purchase frequency × Customer lifespan LTV (profit) = LTV (revenue) × Gross margin %
Worked example. A brand with $60 AOV, where the average customer orders 2.5 times per year and stays for 2 years, has a revenue LTV of $300. At a 60% gross margin, the profit LTV is $180 — that's the upper bound on what you can spend to acquire a new customer and still come out ahead over their full lifetime.
Most healthy ecommerce brands spend 25–40% of profit LTV on customer acquisition (an LTV:CAC of 2.5:1 to 4:1). Going lower leaves growth on the table; going higher squeezes cash flow.
Frequently asked questions
What is customer lifetime value (LTV)?+
LTV is the total revenue (or profit) you can expect from one customer across the entire time they buy from you. It tells you how much you can afford to spend to acquire each new customer while remaining profitable.
How is LTV calculated?+
Simple LTV = AOV × Purchase frequency × Customer lifespan. For a profit-based view, multiply by your gross margin percent. The result tells you the maximum CPA you can sustain over the customer's full relationship with your brand.
What's a good LTV-to-CAC ratio?+
A widely cited benchmark is 3:1 — you earn $3 in lifetime profit for every $1 you spend acquiring a customer. Below 1:1 means you lose money. Between 1:1 and 3:1 is functional but tight. Above 5:1 may suggest you're under-spending on growth.
Should I use revenue LTV or profit LTV?+
Profit LTV (revenue LTV × gross margin %) is the right number for setting CPA targets. Revenue LTV looks impressive but doesn't account for cost of goods, shipping or fees. Always benchmark CAC against profit LTV.
How do I know my real customer lifespan?+
If you have at least 12 months of order data: count unique customers in a cohort, track how many of them keep ordering each month, and plot the survival curve. If you don't, start with a conservative 1–2 year estimate and refine as data accumulates.
How can I increase LTV?+
Three high-impact levers: (1) raise AOV with bundles, upsells and free-shipping thresholds; (2) increase frequency through email/SMS flows, subscriptions and a strong post-purchase experience; (3) extend lifespan by improving product quality, customer service and loyalty programs.
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