Use our handy LTV Calculator below to work out the Lifetime Value of your users. You can also derive the average revenue per user or the average length of your customer relationships you would need to hit a target LTV. If you want to know how to calculate your Customer Lifetime Value, feel free to experiment with our LTV calculator.
Why not try out some different scenarios in order to help you understand this pricing model better?
Our LTV Calculator:
What is LTV?
LTV stands for Lifetime Value and is also known as Customer Lifetime Value (CLTV). It is a useful way to work out how much you will earn from a customer over your entire relationship with them, as opposed to just from a single sale.
By knowing how much money you will make in the long run from a new customer, you can adjust the amount you spend on getting new customers accordingly.
Lifetime Value Example
A pair of shoes from a particular brand sells for £50. However, each person who buys a pair of shoes from that brand generally continues to buy another pair of shoes each year for the next four years.
This means that the Average Revenue per User is £50, and the average length of the relationship is 5 years. This makes the Lifetime Value of each customer £250.
For a deeper examination of this example, see our Lifetime Value definition page.
How to Calculate LTV
The Lifetime Value equation is:
Click to enlargeLTV = Average Revenue Per User x Average Length of Relationship
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