Customer lifetime value calculator
Estimate what one customer could contribute over their relationship with your store. Compare lifetime revenue, contribution and acquisition costs, then see how a different retention scenario changes the result.
Calculate customer lifetime valueYour customer assumptions
All amounts are in USD and all results are per customer. Defaults are fictional examples. Use inputs for the same customer group.
Compare lifetime value
The scenario changes lifespan and adds retention costs. It keeps order value, annual frequency, margin and acquisition cost constant.
| Per customer | Current | Scenario |
|---|---|---|
| Lifetime revenue | Calculating… | Calculating… |
| Lifetime contribution before acquisition | Calculating… | Calculating… |
| Contribution after acquisition | Calculating… | Calculating… |
| Contribution CLV:CAC | Calculating… | Calculating… |
Change in lifetime contribution
Calculating…
Scenario minus current, after extra retention costs and before acquisition. This is over each scenario’s full lifespan, not an annual gain.
Use the estimate to set a cost limit
A longer relationship can support more retention spending, but the added contribution must cover the added costs. Test conservative lifespan assumptions before committing to a benefit. These results exclude fixed overhead, tax and the time value of money.
Model a loyalty program’s ROICustomer lifetime value formula
Lifetime revenue = average order value × orders per customer per year × customer lifespan in years. The purchase period must match the lifespan unit. This follows the simple revenue approach in Shopify’s customer lifetime value guide.
- Current lifetime contribution = lifetime revenue × contribution margin.
- Scenario lifetime contribution = scenario lifetime revenue × contribution margin − extra annual retention cost × scenario years.
- Contribution after acquisition = lifetime contribution − acquisition cost per customer.
- Contribution CLV:CAC = lifetime contribution before acquisition ÷ acquisition cost per customer.
A 40% margin is entered as 40 and calculated as 0.40. Acquisition is deducted once, while extra retention spending applies in every scenario year. Do not deduct the same reward or variable cost in both margin and retention spending.
Worked ecommerce CLV example
A fictional store has a $75 average order, four orders per customer per year and a three-year expected relationship. Lifetime revenue is $75 × 4 × 3 = $900. At a 40% contribution margin, lifetime contribution is $360. A $50 acquisition cost leaves $310 after acquisition, with a contribution CLV:CAC ratio of 7.2.
If the relationship lasts four years, revenue becomes $1,200 and contribution becomes $480 before extra retention costs. Spending an additional $20 per customer per year costs $80 over those four years, leaving $400 before acquisition and $350 after it. The lifetime contribution gain is $40. These are illustrations, not typical results or targets.
Choose inputs that reflect your store
Start with a comparable customer group, such as customers acquired in the same quarter. Use net order value after discounts and returns, and calculate purchase frequency from a representative year. Avoid mixing a recent cohort’s short purchase history with the lifespan of your oldest customers.
Decide what counts as inactive for your category. A consumable and a durable product have different buying cycles. If your store is new, use a range of lifespans and clearly treat them as assumptions. Shopify’s customer reports can help you review customer groups and purchasing behavior.
This simple model assumes constant average spending and frequency throughout the relationship. It does not model changing behavior, churn curves or discounted future cash flows. Compare observed results over time to update the estimate.
Turn a retention scenario into a measurable experiment
Choose a specific customer problem before adding incentives. Our customer retention examples cover practical options to test. Compare similar customer groups, include benefit costs, and check whether contribution improves.
For membership benefits, explore the VIP loyalty guide and membership pricing guide. Memberply helps Shopify merchants configure membership tiers and benefits such as store credit, discounts and exclusive access. The calculator does not predict the effect of installing Memberply.
Explore Memberply on ShopifyCustomer lifetime value questions
How do you calculate customer lifetime value?
Multiply average order value by orders per customer per year and expected customer lifespan in years. This gives lifetime revenue. Multiply by contribution margin to estimate contribution before acquisition costs.
Is customer lifetime value revenue or profit?
The term is used for both. This calculator labels lifetime revenue separately from contribution. Contribution deducts the variable costs represented in your margin and the scenario retention costs entered here, but is not net profit.
What is the difference between CLV and LTV?
CLV and LTV usually describe the same customer lifetime value concept in ecommerce. Check whether a comparison uses revenue, gross profit or contribution and whether acquisition costs are deducted.
How should I estimate customer lifespan?
Use historical customer groups and a consistent definition of inactivity that fits your buying cycle. Recent customers have not completed their relationship with your store, so their observed history can understate lifespan. Test conservative scenarios when your data is limited.
How is the CLV:CAC ratio calculated?
Here it is lifetime contribution before acquisition cost divided by acquisition cost per customer. Scenario contribution also deducts the extra retention costs entered. The ratio is unavailable when acquisition cost is blank or zero.
Does a longer lifespan guarantee higher profit?
No. Extra rewards, discounts, shipping and support can consume the additional contribution. This is a planning scenario, not evidence that a retention program will cause customers to stay longer.
Can I use this calculator for a Shopify store?
Yes. Use consistent order and customer data from your store, then enter your own cost and lifespan assumptions. No store connection or signup is required. The calculator runs in your browser.
Need an order-value baseline? Use the average order value calculator to calculate sales per order and compare a target revenue scenario.
Compare customer value with the cost of finding new buyers. The customer acquisition cost calculator includes acquisition costs beyond ads and optional contribution comparisons.