Free tool · CLV, LTV and LTV:CAC
Free customer lifetime value calculator
Customer lifetime value (CLV, often called LTV) is the revenue an average customer brings in across the whole time they buy from you: average order value × purchases per year × years as a customer. This free CLV calculator works it out, turns it into profit with your margin, and compares it with acquisition cost as an LTV:CAC ratio.
By the Dolphin Analytics team · Last updated · Formula as used in Shopify's customer lifetime value guide
£60.00 × 4 × 3 = £720.00 - Lifetime value (profit)
- £360.00
- LTV:CAC (on profit)
- 3.0:1
- CAC payback (on profit)
- 12.0 months
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What is customer lifetime value?
Customer lifetime value is the total a customer spends with a business across every order, not only the first. It tells you how much you can afford to pay to win a customer: a brand whose customers reorder for three years can spend more on the first sale than one whose customers buy once.
How do you calculate CLV?
Multiply average order value by purchases per year and by years as a customer, the formula Shopify's CLV guide uses. Multiply by gross margin to turn revenue into profit, then divide by acquisition cost for LTV:CAC:
| To find | Formula | Worked example |
|---|---|---|
| CLV (revenue) | order value × purchases per year × years | £60 × 4 × 3 = £720 |
| CLV (profit) | CLV × gross margin | £720 × 50% = £360 |
| LTV:CAC | CLV (profit) ÷ CAC | £360 ÷ £120 = 3.0:1 |
What is a good LTV:CAC ratio?
On profit, a ratio above 1:1 means a customer is worth more than they cost to win; below it, each new customer loses money. Shopify's guide calls 3:1 a good ratio but gives no data behind the figure, so treat it as a rule of thumb. Use the profit version where you can, because a ratio on revenue flatters the result.
Frequently asked questions
Is this customer lifetime value calculator free?
Yes. The Dolphin Analytics customer lifetime value calculator is free, needs no sign-up and runs in your browser, so the numbers you enter never leave your device.
Is CLV the same as LTV?
Yes. Customer lifetime value (CLV) and lifetime value (LTV) mean the same thing. Some teams also call it CLTV.
Should I use revenue or profit?
Profit, when you know your margin. Revenue-based CLV ignores what each order costs you to fulfil, so it overstates how much you can spend to win a customer.
What is CAC payback?
CAC payback is how long a customer takes to cover what you spent to win them: CAC divided by the profit they bring in each year, times 12 months. A £120 CAC with £120 of profit a year pays back in 12 months. The chart shows the same thing as bars climbing past the CAC line.
Where do I find these numbers?
Your shop platform or CRM. Average order value is revenue ÷ orders; purchases per year is orders ÷ unique customers over a year; lifespan is how long customers keep ordering, on average.
Does this calculator discount future revenue?
No. It uses the simple CLV formula, with no discount rate and no retention curve. That suits planning and comparisons; a finance model that discounts future revenue gives a lower figure.
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