What is a customer actually worth to your P&L?
Margin-based customer lifetime value is the contribution margin a customer generates within a set window: average order value, times contribution margin percent, times cumulative orders per customer by day 90, 180 or 365. Unlike revenue LTV, it counts only the money that survives the costs of each sale, so it is the number a customer is actually worth to your P&L.
Revenue per order, before any deductions.
Revenue minus discounts, landed COGS, shipping and fulfilment, and payment and platform fees, as a share of revenue.
Average orders per customer within 90 days of first purchase, from your cohort data. Decimals allowed.
Average orders per customer within 180 days of first purchase, from your cohort data.
Average orders per customer within 365 days of first purchase, from your cohort data.
Bars scale to the largest value. Computed from your inputs, nothing assumed.
Cumulative orders cannot fall as the window widens - check the 90, 180 and 365 day inputs.
Revenue LTV says the customer is worth $180.00. Margin LTV says $72.00: revenue LTV overstates what a customer is worth to your P&L by $108.00.
Three numbers, and where to find them
Five fields, three sources, all from reports you already have. Nothing here is uploaded or gated - the math runs in your browser.
Average order value
Total revenue divided by total orders over a recent period, before any deductions. Your store admin reports it directly, or take a month of revenue and a month of orders from your P&L.
Contribution margin percent
The margin before marketing, as a share of revenue: revenue minus discounts, minus landed COGS (cost plus freight-in plus duty), minus shipping and fulfilment, minus payment and platform fees. If you have never stepped it down, run the contribution margin calculator first and carry the percentage across.
Cumulative orders per customer
From your cohort data. Take customers whose first order landed in the same month, count every order that group placed within 90, 180 and 365 days of first purchase, and divide each count by the number of customers in the group. Your store admin's cohort report shows this, and any order export with a first-purchase date can reproduce it.
The whole method is one multiplication
Value per order that actually survives the sale, times how many orders a customer places inside the window. Computed on contribution margin, not revenue - the same definition as The Math.
The Math writes the same LTV as AOV × purchase frequency × customer lifespan × CM%: frequency times lifespan is exactly the cumulative orders this tool asks for. Use the margin before marketing, so the value a customer accumulates is the pool that pays for acquiring them.
At an average order value of $100.00 and a 40% contribution margin before marketing, each order leaves $40.00 behind.
Your cohort inputs say the average customer has placed 1.2 orders by day 90, 1.5 by day 180 and 1.8 by day 365. So margin LTV is $40.00 × 1.2 = $48.00 at day 90, $60.00 at day 180 and $72.00 at day 365.
Revenue LTV at day 365 counts the full $180.00 that moved through the till. The $108.00 between the two numbers is money that discounts, landed COGS, shipping and fulfilment, and payment and platform fees already claimed.
These are your live inputs from the calculator above, not a canned example. Change a number up there and this paragraph follows.
The decision this number drives
LTV exists to be compared against the cost of acquiring a customer, and that comparison only works when both sides are the same kind of dollar.
The ceiling on acquisition
A customer can only ever pay back acquisition cost out of margin. Read what a new customer costs you against margin LTV, not revenue LTV: dollars out against dollars that actually stay. That is the comparison behind every LTV:CAC read.
The payback clock
The three windows show when the value arrives. If most of a customer's 365-day margin is already in by day 90, acquisition money comes back fast. If it accrues late, your cash sits out for a year even when the year-one total looks healthy.
The overstatement is real money
The distance between revenue LTV and margin LTV is cost that was committed the moment the orders shipped. A bid, an offer or a payback claim built on revenue LTV is built on money that was never yours to keep.
Why we use it - and when we don't
A formula this simple has edges. Here is what it shows cleanly, what it hides, and what we reach for when the blended average stops being enough.
It is margin-true. Most LTV numbers quoted online are revenue LTV, which prices a customer on money that mostly leaves. This one is computed on contribution margin, so it can sit next to acquisition cost without flattering anyone.
It matches how retail customers behave. Cumulative orders by window measure customers who lapse, skip a season and come back. No contract, no cancel event, no churn rate - just what your cohorts actually did.
It is honest about time. Day 90, 180 and 365 are measured windows, not an imagined lifetime. You see when the value lands, not just how big it might eventually be.
Revenue LTV ignores margin entirely. It is the bigger, more flattering number, which is why it headlines most calculators - and it says nothing about what a customer contributes to your P&L.
Churn-formula LTV assumes subscription behavior. The SaaS formula divides revenue per period by a churn rate, modelling a customer who pays every month until a visible cancel event. Retail customers never cancel, so the churn rate it needs is not observable in a store.
And this tool is still one blended average. One AOV, one margin, one repeat curve for every customer, backward-looking by construction. When the decision needs per-customer or forward-looking value, we use the reconciled version: Blufire S4 Customer Value computes margin-true CLV from real cohorts (survival/BTYD CLV, Financial Buckets), and S2 Unit Economics carries LTV:CAC and cohort economics. Reconciled, per real customer, not a formula estimate.
When to run it, and what triggers action
A number this cheap to compute should be recomputed on a schedule, not once in a landing-page tab.
Refresh the cohort inputs when your cohort report updates. A cohort's day-365 orders only settle a year after first purchase, so read matured cohorts, not last month's signups.
Re-run after a price, COGS, freight, shipping or fee change. The contribution margin percent moves, and every LTV on this page moves with it.
Put margin LTV next to what a new customer currently costs you to acquire. The comparison is the whole point of the number - and it is the read The Math judges alongside sub-12-month payback.
If margin LTV at your payback window is below what a customer costs to acquire, acquisition is consuming cash, not creating margin. That is the moment to move from this blended average to per-cohort customer value and find which segments still clear the bar.
Questions operators ask
Because acquisition is paid in real dollars, and only margin dollars can pay it back. Revenue LTV counts money that discounts, landed COGS, shipping and fulfilment, and payment and platform fees have already claimed, so it overstates what a customer contributes. Margin LTV and acquisition cost are the same kind of dollar, which is what makes the comparison meaningful.
From your cohort data. Group customers by first-purchase month, count every order the group placed within 90, 180 and 365 days of that first purchase, and divide by the number of customers in the group. Your store admin's cohort report shows this, and any order export with a first-purchase date can reproduce it.
Because it assumes subscription behavior. Churn-formula LTV divides revenue per period by a churn rate, which models a customer who pays every month until a visible cancel event. A retail customer never cancels: they drift, skip a season and come back, so the churn rate the formula needs is not observable in a store. Cumulative orders by window measure what retail customers actually do.
The margin before marketing, as a share of revenue: revenue minus discounts, landed COGS (cost plus freight-in plus duty), shipping and fulfilment, and payment and platform fees. Keeping ad spend out of the margin means you can compare margin LTV against acquisition cost without counting marketing twice.
No - it describes what past cohorts did. The inputs are the measured behavior of customers you already acquired, so the output is a backward-looking average, and a change in product mix, pricing or acquisition channel will move it. Forecasting a new customer's value takes survival modelling on real cohorts, which is what Blufire S4 Customer Value does. This page is the honest napkin version.
The window is a cash question, not a math question. Margin LTV at day 90 tells you what comes back fast; day 365 tells you what a year of the relationship is worth to the P&L. The Math reads LTV alongside sub-12-month payback, which is why this tool stops at 365 days rather than quoting a lifetime that never lands.
The CM% input comes from the contribution margin calculator. All 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 (survival/BTYD CLV, Financial Buckets), and S2 Unit Economics carries LTV:CAC and cohort economics. Reconciled, per real customer, not a formula estimate.