Calculator

What Is a Customer Worth?

A customer spending $80 four times a year for 3 years at 40% margin is worth $384 in lifetime gross profit. Knowing this tells you exactly how much you can spend to acquire them (see our LTV:CAC tool).

Results

Visualization

Cashbizly provides illustrative business estimates only. Results depend on your inputs and assumptions and are not accounting, tax, or legal advice. Consult a CPA or financial advisor before major decisions. Tax-year figures (mileage, QBI, SEP, etc.) are labelled by year and should be verified at IRS.gov.

How It Works

LTV = AOV x Purchase Frequency x Lifespan x Gross Margin%. It is the total gross-profit a customer generates. Use margin (not revenue) so acquisition spending stays profitable. This is the standard CLV formula; pair it with CAC for the LTV:CAC ratio.

What Should You Do?

Scenario 1: lifting lifespan from 3 to 5 years nearly doubles LTV — retention is cheaper than acquisition. Scenario 2: a 10-point margin gain raises LTV by 25%. Scenario 3: if frequency is uncertain, model a range — LTV is sensitive to retention.

Frequently Asked Questions

Revenue or profit LTV?

Use gross-profit LTV so acquisition math stays honest; revenue LTV overstates what you can spend.

How do I find lifespan?

From your own churn/repurchase data; industry benchmarks are a fallback, not a substitute.

Why pair with CAC?

LTV alone is vanity; LTV:CAC tells you if growth is profitable. See our LTV:CAC tool.

Authoritative References

Investopedia — Customer Lifetime Value — CLV formula and drivers.
Corporate Finance Institute — LTV — LTV and unit economics.