# LTV calculator

Calculate your Customer Lifetime Value (LTV) to understand true customer profitability. Our free e-commerce tool helps you make smarter marketing, advertising, and customer retention decisions.

Source: https://getkanal.com/tools/customer-lifetime-value-calculator  
Last updated: 2026-10-07

## Example and tips

### Example

A skincare store has a $58 AOV, customers buy 3.2 times a year, and stay 2.5 years. That is $464 of lifetime revenue. At a 62% margin, CLV profit is $288, so you can afford a CAC up to roughly $96 and still triple your money.

### Tips

- Use a 12-month CLV, not a lifetime guess. Recent buyers give you a reliable cohort instead of optimistic math.
- A healthy store keeps a CLV-to-CAC ratio of 3:1 or higher. Below 2:1, growth quietly burns cash.
- Lift CLV before chasing new traffic: a post-purchase WhatsApp flow adds one repeat order and moves CLV more than ads.

## How it works

### 1) Provide your customer metrics

Input your store's key averages: Average Order Value (AOV), the number of purchases a customer makes per year, and your gross profit margin.

### 2) Define the customer lifespan

Enter the average number of years a customer typically stays with your brand. This is a crucial factor in determining long-term value.

### 3) Calculate your total customer profit

Get an instant calculation of your profit-based Customer Lifetime Value (LTV), helping you make smarter decisions on ad spend and retention efforts.

## Frequently asked questions

### What is Customer Lifetime Value (LTV)?

Customer Lifetime Value (LTV) is a metric that estimates the total net profit your business will earn from an average customer over the entire course of their relationship with your brand. It tells you how much a customer is truly worth to you after accounting for costs.

### How do I use this calculator?

Enter four key metrics from your store's analytics: - Average Order Value (AOV): The average amount a customer spends in a single transaction. - Purchase Frequency: The average number of times a customer makes a purchase from you in one year. - Customer Lifespan: The average number of years a customer continues to buy from you. - Gross Profit Margin: The percentage of revenue that is left after subtracting the Cost of Goods Sold (COGS).

### Why is LTV so important for my e-commerce store?

LTV is one of the most critical metrics for sustainable growth. It helps you: - Make Smart Ad Spend Decisions: Your LTV tells you the maximum you can afford to spend to acquire a new customer (your Customer Acquisition Cost, or CAC) and still be profitable. - Focus on Retention: It highlights the immense value of keeping existing customers happy and encouraging repeat purchases. - Identify Your Best Customers: You can segment customers by LTV to identify your most valuable audience and tailor marketing efforts to them.

### How can I improve my store's LTV?

To increase your LTV, you need to improve one of the core inputs: - Increase Average Order Value: Use strategies like product bundling, upsells, and free shipping thresholds. - Increase Purchase Frequency: Implement email marketing, loyalty programs, and retargeting campaigns to encourage repeat business. - Increase Customer Lifespan: Focus on excellent customer service, build a strong brand community, and create a memorable customer experience.

### Is this a simple or complex LTV model?

This calculator uses a foundational and widely accepted model for estimating LTV, which is perfect for most e-commerce businesses to get a strong directional understanding of their customer value. More advanced models exist (e.g., cohort analysis), but this tool provides the essential insights needed for strategic decision-making.