Retail Customer Lifetime Value & Repeat Purchase Calculator for 2026
Calculate retail customer lifetime value (LTV) from average order value, purchase frequency, gross margin, and repeat purchase rate, then compare it to CAC.
How Retail Customer Lifetime Value Is Calculated
The calculator multiplies average order value by purchase frequency to get annual customer value, applies gross margin to get annual profit per customer, then uses your repeat purchase rate to derive an implied churn rate and average customer lifespan. Lifetime value is annual profit per customer multiplied by that lifespan, then compared against customer acquisition cost (CAC) to produce an LTV:CAC ratio.
This is a simplified, non-discounted CLV model (it does not apply a time-value-of-money discount rate to future purchases), which is the standard approach used by most free retail/ecommerce CLV calculators. Repeat purchase rate is treated as an annual retention proxy — a higher repeat rate lowers the implied churn rate and lengthens average customer lifespan, which compounds directly into LTV. A ratio of at least 3:1 (LTV to CAC) is the widely cited minimum benchmark for a healthy, scalable acquisition strategy; ratios below 1:1 mean you're losing money on every customer you acquire.
How to Use the Retail Customer Lifetime Value Calculator
Enter average order value
Use your total revenue divided by total number of orders over a recent period (e.g. the last 12 months).
Set purchase frequency and gross margin
Purchase frequency is orders per customer per year; gross margin is revenue minus cost of goods sold, as a percentage of revenue.
Enter your repeat purchase rate
The share of customers who buy more than once in your measurement period — this drives the implied churn rate and customer lifespan.
Enter customer acquisition cost (CAC)
Total marketing and sales spend divided by the number of new customers acquired in the same period.
Review LTV and the LTV:CAC ratio
See your customer lifetime value, average customer lifespan, LTV:CAC ratio, and a healthy/borderline/unhealthy benchmark read on your acquisition economics.
Real-World Scenario Example
"A DTC retail brand has an average order value of $85, customers order 3.2 times per year on average, gross margin is 55%, the repeat purchase rate is 30%, and CAC is $45 per new customer."
Inputs
Result
Annual customer value of $272 and annual gross profit of $149.60 per customer, with a 70% implied churn rate giving a 1.43-year average customer lifespan, produces a lifetime value of $213.71 — an LTV:CAC ratio of about 4.75:1, which is Healthy and above the 3:1 benchmark.
Important Disclaimer
These calculations are simplified estimates for planning purposes only and do not constitute financial advice. Actual customer lifetime value depends on many factors this model does not capture, including cohort-level variation, seasonality, discounting of future cash flows, and changes in retention over time — consult a financial analyst before making budget or acquisition-spend decisions.
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Sources & References
Shopify — What Is Customer Lifetime Value? How to Calculate CLV
https://www.shopify.com/blog/customer-lifetime-value
Klaviyo — Use This Customer Lifetime Value Formula to Calculate CLV
https://www.klaviyo.com/blog/how-to-calculate-clv
HubSpot — How to Calculate Customer Lifetime Value (CLV) & Why It Matters
https://blog.hubspot.com/service/how-to-calculate-customer-lifetime-value