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Guide Customer Lifetime Value (LTV) Calculator 4 min read
How to Use the Customer LTV Calculator
Estimate revenue and gross-profit LTV, evaluate LTV:CAC ratio, and quantify retention improvement impact.
Before You Start
- Use your actual purchase frequency and gross margin, not revenue-only assumptions.
- Choose your target LTV:CAC benchmark before review.
Step-by-Step
- Enter baseline LTV inputs: Add average order value, purchase frequency, lifespan, and gross margin.
- Include CAC and target ratio: Set CAC and desired efficiency threshold (for example 3:1).
- Model retention lift: Apply retention improvement percent to see customer value expansion.
- Review payback outputs: Use payback purchases/months to align finance and acquisition pacing.
How to Read the Output
- Gross-profit LTV is the better decision metric than revenue LTV for CAC planning.
- If CAC is zero, ratio is shown as N/A until real acquisition cost is provided.
Common Mistakes to Avoid
- Ignoring gross margin and optimizing on revenue alone.
- Using an unrealistic retention lift without operational plan.
Use the Tool Now
Run this guide with your real numbers and save your scenario outputs for follow-up planning.