METHOD & GUIDANCE
How this calculation works
Enter figures from the same period and on a consistent VAT-inclusive or VAT-exclusive basis. Tool IQ recalculates every output immediately; nothing you enter is saved or sent to us.
How to use the result
Build the estimate from one customer cohort and a consistent contribution basis, then compare it with acquisition cost and a conservative retention case.
Worked example
A 75 average order, six purchases a year and a three-year relationship produces 1,350 lifetime revenue; at 55% margin, gross-profit LTV is 742.50.
Common mistakes
- Using revenue instead of gross profit for the value comparison.
- Combining purchase frequency from loyal customers with lifetime from all customers.
- Treating a forecast lifetime as observed retention.
Frequently asked questions
Is this calculator free?
Yes. It requires no account and stores no calculation inputs.
Can I use the answer for a formal filing?
No. It is a planning estimate, not accounting, tax, legal or investment advice. Confirm material decisions with a qualified professional.
Should I include VAT?
Use a consistent basis throughout. Businesses that recover input tax commonly model net figures; consumer-facing prices are often considered gross.
Continue the decision
- Customer Acquisition Cost Calculator — Compare acquisition cost with estimated customer value.
- Average Order Value Calculator — Connect order value with margin, repeat buying and CAC.
Method reviewed 26 July 2026. Figures are illustrative and calculated locally in your browser.