LTV calculator: what a customer is worth in margin, not revenue
Most LTV figures are revenue: what a customer spends over their life. But acquisition is paid for out of margin, so the number to compare against CAC is what that spend leaves behind. Enter your averages and see both, side by side.
Revenue per order, after discounts.
Orders in a year divided by customers who ordered that year.
How many years an average customer keeps buying. Use what your cohort data supports.
Share of revenue left after landed COGS, fulfilment and fees. Work it out here.
Optional. Leave at 0 to skip LTV:CAC and payback.
On margin, each customer returns 2.83 dollars for every acquisition dollar and repays CAC in 12.7 months. The revenue view says 7.08, which overstates the return by A$382.50 per customer.
Same customer, two lifetimes
Revenue LTV counts every dollar a customer spends. Margin LTV counts only what is left after the costs of serving those orders, which is the pool that has to repay acquisition. The ratio of the two is simply your contribution margin.
This is the simple constant-rate model: the same order rate every year. Real customers buy more often early and fade. The margin LTV calculator works from a cumulative orders curve instead, and LTV on margin explains the method.
A customer who spends A$85.00 an order, 2.5 times a year, for 3 years is worth A$637.50 in revenue. At a 40% contribution margin, A$255.00 of that is margin.
Against a A$90.00 CAC, the margin ratio is A$255.00 ÷ A$90.00 = 2.83. The customer earns A$7.08 of margin a month (A$85.00 × 40% × 2.5 ÷ 12), so CAC is repaid in A$90.00 ÷ A$7.08 = 12.7 months, and the customer leaves A$165.00 after acquisition.
These are your live inputs from the calculator above, not a canned example. Change a number up there and these paragraphs follow.
Questions operators ask
Multiply average order value by orders per customer per year, then by the number of years a customer stays. That is revenue LTV. Multiply it by your contribution margin percentage and you have margin LTV. In the default example, A$85 × 2.5 × 3 is A$637.50 of revenue, and 40% of that is A$255 of margin. See customer lifetime value for the full definition.
Because CAC is paid out of margin, not revenue. A customer who spends A$637 but leaves A$255 after product, fulfilment and fees can only ever repay A$255 of acquisition cost. Comparing CAC with revenue LTV mixes two different kinds of dollar, and makes the ratio look several times healthier than it is. On a margin LTV basis, break-even is exactly 1.0.
On a margin basis, anything above 1.0 means a customer returns more than they cost to win. How far above you need to be depends on how long the payback takes and how much cash that ties up, because CAC is spent today and margin arrives over years. Read the LTV:CAC ratio alongside CAC payback, never on its own.
Use only what your own data supports. If your oldest customers are two years old, a five-year lifetime is a forecast, not a measurement. A longer horizon inflates LTV while CAC is paid in full on day one, so a conservative lifetime is safer for budget decisions. Cohort analysis shows how long customers actually keep buying.
Related: LTV:CAC ratioWhen does a customer pay back?VIPs losing moneyCM payback calculatorCAC calculatorAll free tools →
Customer value from real cohorts, not a formula
This page runs one blended average. Blufire S4 Customer Value computes margin-true CLV from real cohorts, and S2 Unit Economics carries LTV:CAC and cohort economics. Reconciled, per real customer, not a formula estimate.