Customer Lifetime Value Calculator
Calculate your customer LTV and LTV:CAC ratio. Compare your purchase frequency against industry benchmarks.
Showing example values. Enter your own numbers or
Orders per year
In years
Optional — for LTV:CAC ratio
Optional — enables profit-based LTV
Default: 3 (industry standard)
Customer Lifetime Value
$488
Revenue over 2.5 years
Profit-Based LTV
$219
Based on your 45% margin
Monthly Revenue
$16
Per customer per month
Max Affordable CAC
$73
The most you should pay to acquire a customer at a 3:1 return
Payback Period
2.2 months
How long until you recover your acquisition cost
LTV:CAC Ratio
Strong unit economics. Consider investing more in growth.
Sensitivity Analysis
How small changes to each lever impact your LTV
| Scenario | New LTV | Change |
|---|---|---|
| AOV +10% | $536 | +$49 |
| Frequency +1 | $650 | +$163 |
| Lifespan +6 months | $585 | +$98 |
Your average order value: 65 — Average for All E-commerce
Benchmarks: Littledata (2,800+ stores), IRP Commerce, Dynamic Yield. Updated March 2026.
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Industry benchmarks based on data from Littledata (2,800+ Shopify stores) and IRP Commerce. Updated 2025.
What is Customer Lifetime Value?
Customer Lifetime Value (LTV or CLV) measures the total revenue a business can expect from a single customer account throughout their entire relationship. It is one of the most important metrics in e-commerce because it tells you how much each customer is really worth — not just on a single order, but over their entire buying journey.
The basic formula is straightforward:
For example, if your average order is $75, customers buy 4 times per year, and they stay active for 3 years, your LTV is $75 × 4 × 3 = $900. Knowing this number helps you decide how much you can afford to spend on acquiring new customers while remaining profitable.
What's a Good LTV:CAC Ratio?
The LTV:CAC ratio compares the lifetime value of a customer to the cost of acquiring them. It is the single best indicator of sustainable growth in e-commerce.
- Below 1:1 — You are losing money on every customer you acquire. This is unsustainable unless you have a clear path to improving retention or reducing acquisition costs.
- 1:1 to 3:1 — You are recovering your acquisition cost, but margins are thin. Most businesses in this range need to either boost repeat purchases or cut ad spend on low-performing channels.
- 3:1 (the benchmark) — This is widely considered the healthy threshold. For every $1 you spend acquiring a customer, you earn $3 back over their lifetime.
- 5:1 or higher — Excellent unit economics. At this level, you may actually be under-investing in growth. Consider scaling your ad spend or entering new markets.
Tips to Increase Your Customer Lifetime Value
- Increase AOV with product bundles. Offering curated bundles or "frequently bought together" recommendations can increase your average order value by 10-30%. Free shipping thresholds set slightly above your current AOV also nudge customers to add more items.
- Boost purchase frequency with subscriptions. Subscription models (subscribe & save, membership programs, or replenishment reminders) dramatically increase how often customers return. Even a simple post-purchase email sequence can improve repeat purchase rates by 20-40%.
- Reduce CAC with organic channels. Investing in SEO, content marketing, and word-of-mouth referrals brings down your blended CAC over time. When organic channels deliver customers at near-zero cost, your overall LTV:CAC ratio improves even if paid channels stay the same.
Frequently Asked Questions
How do I calculate purchase frequency?
Divide your total number of orders in a year by the number of unique customers who placed those orders. For example, 12,000 orders from 4,000 customers means a purchase frequency of 3 orders per year.
What if I don't know my CAC?
You can still calculate LTV without CAC — just leave the field empty. To estimate your CAC, divide your total marketing and sales spend for a period by the number of new customers acquired in that same period.
How can I increase my LTV?
Focus on three levers: raise your average order value (bundles, upsells, free shipping thresholds), increase purchase frequency (email sequences, loyalty programs, subscriptions), and extend customer lifespan (great customer service, community building, consistent brand experience).
Industry benchmarks based on data from Littledata (2,800+ Shopify stores) and IRP Commerce. Updated 2025.
Related Tools
- ROAS Calculator — Measure your return on ad spend and find your break-even ROAS.
- Store Health Scorecard — Grade your store across 6 key metrics with industry benchmarks.
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