Free Tool
Customer Lifetime Value Calculator
Work out what an average customer is really worth over their lifetime, so you know what you can afford to spend to win one. No sign-up, no email.
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Each customer is worth
LTV here is profit-based (after gross margin). A common rule is to spend no more than 20-30% of LTV to win a customer.
How the customer lifetime value calculator works
This customer lifetime value calculator gives you a profit-based LTV in seconds. Enter what a customer typically spends per purchase, how often they buy, and how long they stick around. Add your gross margin and the calculator works out what each customer is actually worth to your bottom line - not just in revenue, but in real profit.
The formula is straightforward: annual revenue per customer (purchase value multiplied by purchase frequency) multiplied by lifespan gives you lifetime revenue. Apply your gross margin to get LTV. From there, a 20-30% acquisition budget target drops straight out.
The "what you can spend to acquire one" figure uses 30% of LTV as a starting guide. That is a conservative benchmark - some businesses go higher, especially when retention is strong. The right number for you depends on your cash position and how predictable your churn is.
Why LTV matters
Most businesses set their ad budget by gut feel or by copying competitors. LTV gives you something better: a number. Once you know what a customer is worth over their lifetime, you can work backwards to a maximum acquisition cost and run your paid channels with actual logic behind them.
LTV also reframes the retention conversation. Winning a new customer is almost always more expensive than keeping an existing one. If your average lifespan is two years and you push it to three, your LTV jumps 50% with no extra acquisition cost. That is a bigger lever than most businesses realise.
It also shows you which customers are worth more. If one segment buys twice as often, their LTV might be three times higher. Knowing that changes who you market to, how much you spend to reach them, and how hard you work to keep them.
Want to see how quickly you respond when a lead comes in? Check the Lead Response Time Calculator - response speed has a direct impact on conversion rates, which flows straight into your LTV numbers.
How to grow LTV
Three levers move LTV: purchase frequency, lifespan, and margin. Of the three, frequency and lifespan are usually the most actionable for small businesses.
More frequent purchases come from staying present. Regular follow-up emails, loyalty offers, and re-engagement sequences keep you front of mind between purchases. Most businesses lose customers not because of a bad experience but because they simply forgot about them. Automated follow-up solves that.
Longer retention comes from delivering on what you promised and making it easy to come back. A post-purchase check-in, a renewal reminder, a personalised offer at the right time - these are the touchpoints that extend lifespan. Manually doing all of this at scale is not realistic. Automated sequences handle it without extra headcount.
Better margin usually comes from operational efficiency - fewer manual steps, less re-work, tighter workflows. Automation trims cost per order and per customer interaction, which lifts your gross margin without raising prices.
If you want to build the follow-up sequences that drive repeat business, read our guide on how to automate lead follow-up. Or book a free 30-minute call and we'll map out exactly where automation would move the needle in your business.