Customer LTV calculator
What a customer is worth in gross profit over their full relationship with the brand.
Inputs
Results
Revenue = AOV × Purchases per year × Lifespan
LTV = AOV × Purchases per year × Lifespan × Gross margin
Maximum CAC you can afford while still being long-run profitable. Stay well below this.
CAC ceiling = LTV / 3
The 3:1 LTV:CAC rule is the conventional ecom finance bar for sustainable growth.
Why this calculator is verified
The LTV formula here is the simple cohort version: AOV × purchase frequency × lifespan × margin. This is the standard taught at the Wharton CMO program and used in the Bain customer-loyalty literature. The 3:1 LTV-to-CAC heuristic comes from David Skok's SaaS metrics work and has been validated across DTC by OpenView and Klaviyo benchmark studies. For a more sophisticated version with cohort retention curves, run the analysis in your ecom platform's analytics; this calc is the right starting point.
Worked example
DTC supplements, $75 AOV, 4 buys/year, 2.5-year life, 35% margin
Lifetime revenue = $75 × 4 × 2.5 = $750. LTV = $750 × 0.35 = $262.50. CAC ceiling at 3:1 = $87.50. If your CAC is $60, ratio is 4.4:1, which is healthy. If CAC creeps to $90, ratio drops to 2.9:1 and you're at the conventional break point.
Sources for the formula
- Bain, customer lifetime value primer
Authoritative framing of the simple LTV formula.
- David Skok, SaaS metrics 2.0 (the 3:1 LTV:CAC rule)
Source of the conventional 3:1 ceiling. The math applies to ecom too.
- Wharton, marketing analytics primer
Academic version of the same formula.
- Klaviyo, DTC LTV benchmarks
Empirical baseline for plausible inputs.
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