Customer Lifetime Value Calculator
Calculate LTV for your e-commerce business. Input your average order value, purchase frequency, and customer lifespan to understand how much each customer is worth.
Percentage of customers who stop buying each year. Caps your effective lifespan.
Breakdown
Based on a 40% margin, you can afford to spend up to $76 to acquire a customer and maintain a healthy 3:1 LTV:CAC ratio. Check your actual ratio with our LTV:CAC Ratio Calculator, or see your real CAC with the CAC Calculator.
This calculation is automated by
Polar Bear
Get real LTV from your Shopify data
Arktis connects to your Shopify store and calculates actual LTV from real purchase history, segmented by traffic source, first product, and acquisition campaign. No formulas needed.
Start 7-day free trialBeyond Simple LTV Formulas
The formula AOV x Frequency x Lifespan gives you a starting point, but real LTV is more nuanced. Customer behavior is not linear: most churn happens in the first 3 months. Those who stay past 90 days are significantly more valuable. This is why LTV by cohort (when they were acquired) and by source (how they found you) matters more than a single blended number.
LTV by Traffic Source Changes Everything
Customers acquired through different channels behave differently. Organic search customers often have 30-50% higher LTV than paid social customers because they had higher intent when they first visited. Email-acquired customers tend to have the highest repeat purchase rates. Knowing LTV by source lets you set different CAC targets per channel, not one blended target.
Frequently Asked Questions
What is Customer Lifetime Value (LTV)?
LTV is the total revenue a business can expect from a single customer over their entire relationship. It's calculated as Average Order Value x Purchase Frequency x Customer Lifespan.
Why does LTV matter?
LTV tells you how much you can afford to spend acquiring a customer (your CAC budget). If your LTV is $500, spending $100 to acquire that customer is a great deal. Without knowing LTV, you can't make informed marketing budget decisions.
What is a good LTV:CAC ratio?
A ratio of 3:1 or higher is considered healthy. Below 1:1 means you're losing money on every customer. Between 1:1 and 3:1 means your margins are thin. Above 5:1 may mean you're under-investing in growth.
Should I use gross or net LTV?
Both are useful. Gross LTV (revenue) shows total customer value. Net LTV (with margin applied) shows actual profit per customer and is more accurate for budgeting CAC limits.
What is churn rate and how does it affect LTV?
Churn rate is the percentage of customers who stop buying each year. High churn means shorter effective lifespans and lower LTV. A 25% annual churn rate means your average customer stays 4 years, regardless of what you input as lifespan.
How does Arktis calculate LTV?
Arktis connects to your Shopify store and calculates real LTV from actual purchase data - segmented by traffic source, first product purchased, and acquisition campaign. No manual input needed.
More free tools
Website Tech Stack Analyzer
Detect the technologies, analytics tools, ad pixels, and frameworks powering any website. Performance scores and security audit included.
Attribution Model Comparison
See how first-touch, last-touch, linear, time-decay, and position-based models allocate credit differently across your marketing channels.
ROAS Calculator
Calculate your Return on Ad Spend per channel and see it against your own break-even ROAS, worked out from your margin.