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Customer lifetime value calculator

How much a customer is worth over the whole relationship, in revenue and in profit — and so what you can afford to spend to win one.
Lifetime profit
US$180.00
Lifetime revenue
US$360.00
Max acquisition cost at 3:1
US$60.00

How it is calculated

Lifetime revenue = average order value × orders per year × years.

Lifetime profit = lifetime revenue × gross margin.

The 3:1 rule of thumb keeps the cost of winning a customer at no more than a third of their lifetime profit, leaving room for overheads.

Questions

How do I find my own numbers?

From your order history: average order value is revenue ÷ orders; orders per year is orders ÷ unique customers over a year. Years as a customer is the hardest — if unsure, use 1 and treat anything more as upside.

Why use profit, not revenue?

Because you pay for acquisition out of profit. A $300 lifetime revenue on a 20% margin justifies far less ad spend than the same revenue on 60%.

How can I raise lifetime value?

Bring customers back: follow-up emails, a reason to reorder, a loyalty offer that costs less than acquiring someone new. Small changes to orders per year compound across every customer.

If you run WooCommerce

WooFinance reports profit per order in WooCommerce, which is the figure lifetime value should be built from. WooFinance is our plugin; the calculator above works the same whether you use it or not.

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