How it works
Revenue lifetime value estimates customer revenue from basket value, annual purchase frequency and customer lifespan. Contribution LTV additionally accounts for your entered contribution margin.
The formula
Keep currency, units and time periods consistent. Percentage inputs use percentage points (enter 5 for 5%). Results are rounded only for display; tiny nonzero values may use scientific notation. Undefined ratios are shown as unavailable.
AOV: $75; Purchases / year: 3; Lifespan: 2.5 years; Revenue LTV: $562.50; Contribution margin: 40%; Contribution LTV: $225.00; CAC: $45.00; LTV:CAC: 5.00x.
Calculation method
Contribution LTV and revenue LTV are not interchangeable. Use contribution LTV when comparing with acquisition cost so product and variable operating costs are represented.
Interpretation
A selected LTV:CAC target implies either a minimum contribution LTV or a maximum CAC. The comparison uses your target and does not prescribe a universal acceptable ratio.
Limitations
This is an estimate with constant behavior, no discounting and no retention curve. It excludes costs outside the entered contribution margin and is not guaranteed lifetime profit.
Method and reference sources
Method and content checked 2026-09-20. These sources provide background, not endorsement or professional certification. The formula and limitations above define this calculator.
- Google Ads — Campaign performance metricsAdvertising metric definitions; profit targets and attribution assumptions are supplied by you.
- SBA — Break-even pointContribution, variable costs and fixed-cost break-even context; tool-specific extensions are explained above.
Frequently asked questions
Why compare contribution LTV rather than revenue LTV with CAC?
Revenue includes amounts needed to deliver the product or service. Contribution LTV subtracts the costs represented by your margin, making it a more useful comparison with acquisition spending.
What is a worked example for Customer Lifetime Value?
AOV: $75; Purchases / year: 3; Lifespan: 2.5 years; Revenue LTV: $562.50; Contribution margin: 40%; Contribution LTV: $225.00; CAC: $45.00; LTV:CAC: 5.00x.