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Get startedLTV
Customer lifetime value · CLVThe profit a customer generates over their whole relationship with you.
LTV (lifetime value) is the total profit a customer produces across all their orders — not just the first. It tells you how much you can afford to spend acquiring a customer and still profit. Always base it on margin, not revenue, and check it against CAC.
Formula
LTV = Avg order value × Orders per customer × Gross margin
Example: $50 AOV × 3 orders × 50% margin = $75 LTV.
What a good result depends on
Meaningful only next to CAC — aim for an LTV:CAC around 3:1.
Common mistakes
- Using revenue instead of margin.
- Assuming every customer repeats — segment by cohort.