ClarityHow to use this tool
- Enter average order value, orders per year, customer lifespan, gross margin.
- Select Calculate to view the result.
- Check the method and assumptions below before using the result.
Input reference and sample values
Use the units and choices shown for each field. Sample values are provided for practice, not as recommendations.
| Input | Format and units | Sample |
|---|---|---|
| Average order value | Numeric value. Unit: money. Zero or positive. | 50 |
| Orders per year | Numeric value. Zero or positive. | 4 |
| Customer lifespan | Numeric value. Unit: years. Zero or positive. | 3 |
| Gross margin | Numeric value. Unit: %. Zero or positive. Maximum: 100. | 40 |
Result for these sample inputs
240 currency units
Select Try the example in the form to load these values and calculate them again. This replaces the current form inputs. Compare the result with the method and worked explanation below.
The method, explained
LTV = average order × orders/year × years × gross margin/100.
Using average order value = 50 money, orders per year = 4, customer lifespan = 3 years, gross margin = 40 %, the result is 240 currency. Change these example inputs to match your task; use the method above to check each step.
What to keep in mind
Undiscounted approximation; acquisition and retention costs are excluded. Use consistent currencies, reporting periods and accounting definitions. This arithmetic estimate excludes items not entered in the form.
Methodology maintained by ClarityKit. How these tools are built and checked.