People always ask me how to calculate Life Time Value of a customer segment. The truth is that there are many ways to calculate this. It depends on your business model and recency and rate of repeat orders.

1. LTV Inputs
Segment
50,000
Year 3
Year 4
Year 5
Year 2
Year 1
$78.00
Retention Rate
20%
8%
5%
3%
2%
Orders per Year
1.39
1.46
1.50
1.42
1.57
Average Order
$208.82
$239.85
60%
59%
Acquisition Cost
Gross Profit
$265.28 $215.59 $242.38
62%
60%
58%

2. LTV Results
Total
Customers
Revenue per
Customer
Gross Profit
per
Customer
LTV per
Customer
Year 2
50,000
10,000
$290.26
$350.18
$397.92
$306.14
$380.54
$174.16
$206.61
$246.71
$183.68
$220.71
Year 1
Year 1
Year 3
Year 4
Year 5
Year 2
Year 3
Year 4
Year 5
$174.16
$215.48
$235.21
$244.40
$251.02
4,000
2,500
1,500