Free tool for stores & businesses
Customer Lifetime Value & Acquisition Cost Calculator
See what a customer is worth to your business over time compared with what you pay to win them: customer lifetime value (LTV), customer acquisition cost (CAC), the LTV:CAC ratio, and how many months it takes to earn back CAC.
- LTV in revenue & profit
- LTV:CAC ratio
- CAC payback period
Result
Enter order value, orders per year, lifespan, margin and acquisition cost.
Developed by Ahmed Elshamy All free tools
How it works
Three simple steps
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Enter buying behaviour
Average order value, orders per year, and roughly how many years a customer stays.
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Add margin and CAC
Gross margin, and CAC directly or from marketing spend and new customers.
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Read the ratio and payback
Does each new customer return more than they cost — and when?
Why isn’t first-order profit enough?
Many businesses judge ads on first-order profit alone, pausing campaigns that would have brought customers who buy again and again. Others overpay for customers who never return. LTV puts acquisition cost in the right context: the profit of the whole relationship, not a single order.
The tool calculates LTV on gross profit rather than revenue, because revenue doesn’t pay for ads — profit does. The result is an estimate based on your inputs, so review it regularly against real customer data.
FAQ
Good to know
How is customer lifetime value calculated?
In its simple form: average order value × orders per year × years a customer stays, then × gross margin for profit-based LTV.
How do I calculate CAC?
CAC = total marketing and sales costs over a period ÷ new customers in the same period. Enter it directly or calculate it in the tool.
What’s a good LTV:CAC ratio?
A common rule of thumb treats 3:1 or higher as healthy and below 1:1 as a loss. It’s a general guide; the right ratio depends on your fixed costs, cash cycle and growth plans.
Where do I find purchase frequency and customer lifespan?
From your order data: how often a repeat customer buys per year, and after how many months they typically stop. If your store is new, start with a conservative estimate.