Shopify Customer LTV Calculator

• Average order value (AOV) = sales ÷ orders.
• Purchase frequency = orders ÷ customers: how many times a customer orders in a year.
• Yearly value = AOV × frequency.
• Revenue LTV = yearly value × how many years a customer keeps buying.
• Margin LTV = revenue LTV × your margin. This is what a customer is actually worth, and the number to compare with what you pay to win one.
• LTV to CAC = margin LTV ÷ customer acquisition cost.

This is the input most people guess, so the calculator offers a way to work it out: if a share of this year’s customers buy again next year, the average customer stays 1 ÷ (1 − that share) years. A 40% repeat rate gives about 1.67 years; 60% gives 2.5. Use the share of last year’s customers who ordered again this year, from your Shopify customer reports.

A store sold $240,000 over 12 months across 3,000 orders from 2,000 customers. The AOV is $80, each customer ordered 1.5 times, so a customer is worth $120 a year. If customers keep buying for 2 years, revenue LTV is $240. At a 50% margin, margin LTV is $120.

If a new customer costs $40 in ads, LTV to CAC is 3 to 1, and the first order ($80 at 50% margin, so $40) pays back the ad cost on its own. At a 3 to 1 ratio, $40 is also the most this store should pay per new customer.

• Quoting revenue LTV against CAC. Ads are paid from margin, not revenue. Compare margin LTV with CAC.
• Using an optimistic lifespan. Five-year lifespans are easy to type and rarely true for a young store. Work it out from your repeat rate.
• Mixing periods. Sales, orders and customers must cover the same 12 months.
• One LTV for everyone. Customers who first bought on a deep discount often come back less. Work out LTV separately for them when you can.
• Treating 3 to 1 as a law. It is a common rule of thumb for leaving room for overheads, not a target every store should hit.

It gives an average. It does not account for money arriving later being worth less, and it cannot see differences between kinds of customer. Knowing who your repeat buyers are, and writing to them, is what the free store audit and Tilly’s agents are for. To see what repeat purchases from email are worth, try the email flow revenue calculator.