Customer LTV calculator
Model low, base and high customer contribution over a stated cohort horizon using transparent order and margin assumptions.
Last updated
Written by Madly editorial
01 / Your inputs
Run the numbers
Example figures are filled in so you can see a result straight away. Replace them with your own. Results update as you type; no data is sent or saved.
1–120 months; defaults to 12 when omitted. This estimates a bounded cohort period, not an entire lifetime prediction.
Optional measured or assumed order count over the same horizon. Default: 75% of base orders.
Optional order count over the same horizon. Default: 125% of base orders. Scenarios hold AOV and margin constant, not confidence bounds.
Average revenue per customer order.
Base-scenario average orders within the stated cohort horizon; a fractional average is valid. Include customers with zero repeat orders.
Contribution remaining after variable costs but before acquisition advertising, as a percentage of revenue.
02 / Calculation
Base scenario cohort contribution
Calculated result
£60.00
Unit: £/customer
- Revenue over 12 months
- £150.00 / customer
- Low contribution scenario
- £45.00 / customer
- Base contribution scenario
- £60.00 / customer
- High contribution scenario
- £75.00 / customer
12-month illustrative cohort horizon. Low/base/high orders: 1.875/2.5/3.125. AOV and pre-acquisition margin are constant in all scenarios; no retention, discounting or lifetime certainty is inferred.
Formula
Scenario contribution (£/customer) = average order value (£) × orders over the stated horizon × pre-acquisition contribution margin (% ÷ 100).
How to read this
A higher assumed repeat rate lifts the result mechanically. Check actual cohorts before allowing more acquisition spend.
Assumptions
Orders include the first order within the chosen horizon. Blank low/high scenarios use 0.75×/1.25× the base orders, illustrative sensitivity assumptions, not measured retention. Cohorts, refunds and margins can differ; no lifetime certainty or discounting is inferred.
How to use this tool
- Choose a period, for example 12 months from first purchase.
- Enter average order value, the average orders per customer in that period and your margin.
- Read the lifetime value in margin terms.
- Compare with CAC to see how many times over a customer repays the cost of finding them.
Worked example
Illustrative example: £50 average order × 3 total orders × 40% margin gives £60 estimated contribution per customer.
What this measures
Choose a cohort horizon (12 months if left blank) and expected total orders within that horizon. Low, base and high scenarios hold average order value and pre-acquisition contribution margin constant.
Formula and units
Scenario contribution (£/customer) = average order value (£) × orders over the stated horizon × pre-acquisition contribution margin (% ÷ 100).
Assumptions and review notes
Orders include the first order within the chosen horizon. Blank low/high scenarios use 0.75×/1.25× the base orders, illustrative sensitivity assumptions, not measured retention. Cohorts, refunds and margins can differ; no lifetime certainty or discounting is inferred.
A higher assumed repeat rate lifts the result mechanically. Check actual cohorts before allowing more acquisition spend.
LTV is only as good as the repeat rate behind it. For a new store the honest answer is that you do not know yet, so use first-order margin and treat repeat orders as upside. For established stores, cohort data from your own platform is far better than any rule of thumb. Prefer a margin-based LTV to a revenue-based one.
- Product replenishment cycle.
- Cohort age and how much history you have.
- Discount reliance among repeat buyers.
- Churn and refunds.
- Using revenue rather than margin.
- Projecting a long lifetime from a few months of data.
- Averaging customers that behave very differently.
- Setting CAC limits from an unproven LTV.
A closer look
Common questions.
- What is customer lifetime value?
- It is the total value a customer brings over a chosen period. Here it is calculated in margin terms.
- How long a period should I use?
- Use one you have data for. Twelve months is common, but a shorter window is safer for a young store.
- LTV or first-order margin?
- Start with first-order margin. Add repeat purchases only when you can show them.
- What is a good LTV to CAC ratio?
- There is no fixed answer. It depends on cash, margin and payback time, so review it alongside CAC payback.
- Does LTV include acquisition cost?
- No. LTV is the value, and you compare it with acquisition cost separately.