Customer LTV Calculator

How the customer lifetime value formula works

Three multiplications and one honest cut:

LTV revenue = AOV × purchases per year × years active
LTV profit = LTV revenue × gross margin
LTV:CAC = LTV profit ÷ CAC

With the defaults: €80 × 1.8 purchases × 2 years = €288 of revenue per customer. At 60% margin that becomes €172.80 of profit. Against a €30 CAC the ratio is 5.8, well above the 3:1 line most operators treat as healthy. That ratio also tells you your ceiling: at 3:1 you could pay up to €57.60 per customer and still hold healthy economics.

The revenue LTV trap

Revenue LTV is the most dangerous number in ecommerce because it always looks generous. €288 per customer sounds like room to pay €90 in acquisition. It is not. Margin comes off first, then payment fees, shipping, returns. If you justify ad spend with revenue LTV, you are spending money the P&L never sees. Every bid ceiling, every CAC target, every "can we afford this channel" decision should run on profit LTV.

Payback is the cash-flow reality check

A great ratio can still bankrupt you if the profit arrives slowly. The calculator divides CAC by monthly profit per customer (AOV × frequency × margin ÷ 12) to show how many months of purchasing it takes to earn your acquisition cost back. Under 6 months you can recycle cash fast enough to grow aggressively. Past 12 months, every new customer locks up capital for a year, and scaling means financing that gap.

Where to get real inputs

Pull frequency and lifespan from cohort reports, not from all-time averages. An average across your whole customer base mixes loyal 2019 customers with last month's one-time discount buyers and flatters every number. Take a cohort from 12 to 24 months ago, follow what those customers actually did, and use that. If your store is too young for real lifespan data, cap the years input at 1 and let upside be a bonus, not an assumption.