What a customer isactually worth.
Until you know what a customer is worth over their whole life with you, every spending decision is a guess. Get both the revenue and the margin adjusted lifetime value, the real ceiling on what you can pay to acquire one.
Your numbers
Revenue per purchase.
How often a customer buys.
How long they keep buying.
What you keep after product cost.
The verdict
Margin-adjusted LTV
$432
Revenue LTV
$720
Annual value (margin)
$144
Implied lifespan
3
Years a customer keeps buying.
Revenue vs margin vs your CAC ceiling
Reverse-solve · the budget LTV unlocks
What you can pay to acquire
Max CAC allowed
$144
Margin LTV
$432
At a 3.0 : 1 target, a $432 margin LTV lets you spend up to $144 to win a customer. The more conservative your target ratio, the lower the CAC you can justify — and the more you lean on retention to grow.
Sensitivity · retention is a growth lever
LTV & CAC ceiling by lifespan
| Lifespan | Margin LTV | Max CAC 3:1 |
|---|---|---|
| 1 yr | $144 | $48 |
| 2 yrs | $288 | $96 |
| 3 yrs | $432 | $144 |
| 4 yrs | $576 | $192 |
| 5 yrs | $720 | $240 |
Each extra year of lifespan lifts LTV — and the CAC you can afford — by a full $144 a year. That's why keeping customers longer beats almost any acquisition tactic.
Your move
Know what a customer's worth. Then spend like it.
Margin-adjusted LTV $432 (revenue LTV $720).
Most brands under spend on acquisition because they undercount LTV, or over spend because they ignore margin. Send me your numbers and I'll show you the real value of a customer and what it unlocks.
Plain English
Lifetime value is the budget for everything.
Customer lifetime value (LTV, sometimes CLV) is the total worth of a customer across their entire relationship with you, every repeat purchase, not just the first. It's the single number that sets how aggressively you can afford to acquire, discount, and retain.
Revenue LTV is the headline figure, but the one that governs decisions is margin adjusted LTV: lifetime revenue times your gross margin. That's the actual cash a customer leaves behind after product cost, and the ceiling your CAC has to stay comfortably below.
Small changes compound hard here. Nudging purchase frequency or extending lifespan by a few months can lift LTV more than any single ad ever will, which is why retention is a growth lever, not an afterthought.
The formula
LTV = AOV × purchases/year × lifespan × gross margin
$80 order, 3 purchases a year, 3 year lifespan = $720 revenue per customer. At 60% margin, margin adjusted LTV = $432, so a CAC under ~$144 keeps you at a healthy 3:1.
Make your LTV bigger
Low purchase frequency.
Lifecycle email, replenishment reminders, and subscriptions turn one time buyers into repeat ones, the fastest LTV lever for most brands.
Short lifespan / high churn.
Customers leaving early caps LTV. Fix onboarding and post purchase experience before spending more to acquire.
Low AOV.
Bundles, upsells, and tiers raise the value of every order, lifting LTV without needing more customers.
Thin margin.
Revenue LTV can look great while margin adjusted LTV is weak. Protect price and product margin. That's the number CAC must beat.
Grow lifetime value
01Add a subscription
Recurring purchases multiply lifespan and frequency in one move.
02Nail onboarding
The first 30 days decide retention; a strong start extends lifespan.
03Raise AOV
Bundles and upsells lift the value of every order across the whole lifetime.
04Win the second purchase
Repeat buyers are far more valuable; engineer the second order deliberately.
05Reduce churn
Win back flows and proactive support keep customers buying longer.
06Reward loyalty
Tiered perks and referrals deepen the relationship and stack referral LTV on top.
The vocabulary
- LTV / CLV
- Customer lifetime value, total worth of a customer over their relationship with you.
- Revenue LTV
- Lifetime revenue before costs: AOV × frequency × lifespan.
- Margin adjusted LTV
- Revenue LTV × gross margin, the real cash a customer contributes.
- Churn
- The rate at which customers stop buying; lifespan ≈ 1 ÷ churn.
- AOV
- Average order value, revenue per purchase.
Lifetime value questions
Multiply average order value by purchases per year by customer lifespan in years to get revenue LTV, then multiply by gross margin for the margin adjusted figure that actually governs spending. $80 × 3 × 3 × 60% = $432.
Keep going
A calculator tells you what. A call tells you what to do about it.
Send me the account behind these numbers. I'll tell you straight where the money's leaking and what I'd fix first — free, and you keep it whether you hire me or not.