SellerUtils

Customer Lifetime Value Calculator

Customer lifetime value estimates what an average customer generates over an active relationship. Revenue CLV = order value × orders per year × lifespan in years. Add a contribution margin and CAC to examine the value left after costs.

Your average customer

$

After refunds, excluding sales tax.

Use an annual average; fractional values are allowed.

Expected active relationship, measured in years.

%

After variable order costs, before acquisition and retention spending.

$

Use your measured acquisition cost, not cost per repeat order.

Results

Revenue lifetime value

$300.00

Estimated lifetime revenue per customer. Revenue is not the acquisition budget you can afford.
Lifetime orders per customer
6
Revenue per customer per year
$150.00
Contribution lifetime value
$120.00
Contribution LTV / CAC
4:1
Contribution after CAC
$90.00
Assumes stable order value, frequency and margin. Future cash flows are not discounted; retention spending, overhead and taxes are excluded.

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Lifetime value is an assumption-based projection. Revenue CLV is not profit; contribution CLV excludes retention spending, fixed overhead, taxes and discounting. Read the formulas and assumptions.

How to estimate customer lifetime value

  1. Enter average order value after refunds, excluding sales tax.
  2. Enter average orders per customer per year, including repeat orders. Fractional values such as 0.5 are valid.
  3. Estimate how many years a customer remains active, using a comparable customer cohort.
  4. Optionally add your margin after variable order costs and your measured acquisition cost per new customer.

Revenue and contribution formulas

  • Lifetime orders = Orders per year × Customer lifespan
  • Revenue CLV = Average order value × Lifetime orders
  • Contribution LTV = Revenue CLV × Contribution margin
  • Contribution after CAC = Contribution LTV − CAC
  • Contribution LTV / CAC = Contribution LTV ÷ CAC

Worked example: repeat purchases

With a $50 order value, three purchases per year and a two-year active relationship, the customer places six lifetime orders and generates $300 in revenue. A 40% contribution margin leaves $120 before acquisition and retention spending. At a $30 CAC, contribution after acquisition is $90 and contribution LTV / CAC is 4:1.

Extending the relationship from two years to three increases modeled revenue to $450 and contribution to $180, if frequency and margin hold. This is a sensitivity scenario, not evidence that a retention campaign caused that change.

Using the result for acquisition planning

Keep the cohort, time units and cost basis consistent. A customer acquired recently has not yet had the opportunity to demonstrate a long lifespan. Compare observed repeat purchases with the projection as the cohort matures.

The model assumes constant order value and margin. It does not discount future contribution or deduct retention costs. Use actual CPA and ad-only CAC for campaign evidence, or the break-even CPA calculator to inspect first-order limits.

Definition and source

Shopify's CLV guide describes the order-value, frequency and lifespan model. Contribution outputs are SellerUtils' extension under the assumptions stated here. Source checked October 8, 2026.

Frequently asked questions

How is customer lifetime value calculated?

Revenue CLV = average order value × orders per customer per year × active customer lifespan in years. Purchase frequency and lifespan must use matching time units.

Are CLV and LTV the same?

The terms are often used interchangeably, but the value basis matters. This tool labels revenue lifetime value and contribution lifetime value separately; they should not be compared as if they were the same metric.

Can I use lifetime revenue as my acquisition budget?

No. Revenue still has to cover order costs. Contribution LTV deducts the variable costs represented by your margin, but retention spending, overhead and taxes may still remain. Future contribution is also not available as immediate cash.

What does the LTV / CAC ratio use here?

It uses contribution lifetime value divided by your entered cost per new customer. It is not revenue LTV divided by cost per repeat order. A zero or absent CAC has no defined ratio.

Does this predict customer retention automatically?

No. You supply the average active lifespan and purchase frequency. The simple model assumes they and the contribution margin stay stable, without discounting future cash flows.

By the SellerUtils team · Last updated October 8, 2026. Results are estimates for planning and are not financial advice.

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