How to use this calculator
- Enter average order value.
- Enter repeat purchase frequency per year.
- Enter expected customer lifetime in years.
- Enter gross margin percentage to calculate profit-based LTV.
Estimate Shopify customer lifetime value from order value, purchase frequency, customer lifetime, margin, and CAC. Use it to set marketing budget limits.
Higher LTV allows more room for acquisition spending, retention programs, loyalty incentives, and customer support without losing profitability.
Profit-based LTV is more useful than revenue-based LTV because it reflects the value available to cover CAC and overhead.
With $70 AOV, 4 purchases per year, 2.5 years lifetime, and 45% margin, LTV is $315.
A good LTV is high enough to support CAC, overhead, and profit. Many stores judge it by LTV:CAC rather than an absolute number.
Multiply average order value by purchase frequency, customer lifetime, and gross margin to estimate profit-based customer value.
Increase repeat purchases, improve retention, build loyalty programs, add subscriptions, cross-sell related products, and improve post-purchase email flows.
Yes. Profit-based LTV is better for marketing decisions because revenue does not show how much value remains after cost of goods.
Many ecommerce operators target at least 3:1, meaning lifetime gross profit is three times acquisition cost.
| Metric | Use |
|---|---|
| LTV | Expected gross profit per customer. |
| Annual Value | Yearly customer profit contribution. |
| Lifetime Orders | Expected number of orders per customer. |