LTV Calculator

LTV (lifetime value) is an estimate of how much revenue, or margin-adjusted customer value depending on the model, a customer generates over the entire time they remain a customer. It isn't measured directly the way a single transaction is; it's modeled from data like average order value, purchase frequency, customer lifespan, or churn rate, which is why more than one legitimate formula exists for it. A simple LTV model built from order history describes revenue potential; a margin-adjusted model describes the portion of revenue remaining after the costs represented in gross margin. Neither version predicts what any individual customer will be worth; both describe an average across a cohort, and both are only as reliable as the assumptions and data feeding them.

If the result is feeding an acquisition-spend decision or an LTV:CAC ratio, use the margin-adjusted model; it's built for that, since it accounts for gross margin rather than raw revenue. If a quick, backward-looking estimate from order history is all that's needed, the simple model is faster and requires less input data, though it will overstate value for any business with real cost of goods. If the business is a mobile app measuring revenue per active user per day rather than tracking discrete orders, the ARPDAU-based model fits that data shape without forcing it into an order-based formula it was never measured for.

In practice the two are the same metric. LTV (lifetime value) and CLV (customer lifetime value) are used interchangeably across marketing, finance and analytics, and neither label implies a specific formula or a different calculation method. A small number of sources draw a soft distinction, using CLV for one individual customer's value and LTV for an average across a customer base, but this convention isn't consistently followed even among sources that mention it, and plenty of authoritative material uses the terms the other way around or treats them as identical outright. What matters more than which label is used is checking the formula and inputs behind the number: a 'CLV' computed with the simple revenue model and an 'LTV' computed with the margin-adjusted model aren't comparable, regardless of which term either one uses.

There's no universal good LTV. The number only means something next to what it costs to acquire that customer and how quickly that value actually arrives. A $720 LTV is excellent against a $50 CAC and concerning against a $700 one, and a business with a long average customer lifespan can tolerate a smaller-looking LTV per period than one with high churn. Pair it with CAC as an LTV:CAC ratio, or check CAC payback period to see how quickly the acquisition cost is recovered relative to when the value shows up. LTV figures published as universal benchmarks rarely state which of the three models produced them, which makes them unreliable to compare against.

Far enough to capture a representative cohort's full or near-full lifecycle, not so far back that the business, pricing, or product has meaningfully changed since. For the simple model, that usually means using order history from customers who joined far enough in the past that most of them have already reached the end of a typical lifespan, rather than a recent cohort that's still active and whose eventual lifespan is unknown. For the margin-adjusted model, the churn rate should come from a period long enough to smooth out normal month-to-month noise but recent enough to reflect current retention, not churn behavior from before a major pricing or product change.