Customer Lifetime Value (LTV)

Estimate the total revenue or profit you can expect from a single customer over time.

Average Order Value (AOV) ($)

Purchase Frequency (Orders Per Year)

Customer Lifespan (Years)

Profit Margin (%)

Customer Lifetime Value (Revenue) $600.00

Lifetime Profit $120.00

Why LTV Matters

Customer Lifetime Value (LTV) is one of the most important metrics for any e-commerce business. It tells you exactly how much you can afford to spend to acquire a customer (CAC).

Formula:

LTV = AOV × Purchase Frequency × Lifespan

If your LTV is $120 and your CAC is $30, you have a healthy 4:1 LTV/CAC ratio. If LTV is lower than CAC, your business model may need adjustment.