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What is a customer actually worth over 12 months?

LTV is the most abused number in DTC: modeled on revenue, stretched over 36 months, used to justify CAC that never pays back. This tool builds it from 12-month lifetime orders times gross margin, with your repeat rate graded against your category's band. On timing, half of all repeat purchases happen inside the first 30 days.

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By Taylor Sicard · co-founded WIN Brands Group and has built portfolios of consumer brands to mid nine figures in annual revenue · the retention math behind brands that compound instead of churn
HOW TO CALCULATE LTV AND REPEAT RATE HONESTLY

Build LTV on a 12-month window and on margin, not revenue. Lifetime orders are 1 plus your repeat rate times the average number of extra orders a repeating customer places in the year. Multiply lifetime orders by AOV and gross margin and you have gross-margin LTV, the only version you can spend against, because CAC comes out of margin.

  • Formula: lifetime orders = 1 + (repeat rate x additional orders per repeating customer). Gross-margin LTV = AOV x gross margin x lifetime orders.
  • Inputs: AOV, gross margin %, product category, 12-month repeat rate %, additional orders per repeating customer, and blended CAC if you want the ratio graded.
  • Category bands for 12-month repeat rate: consumables and CPG 35 to 50%, apparel 20 to 30%, home goods and durables 15 to 25%.
  • Healthy LTV:CAC by category: consumables 3.5:1 to 6:1, apparel 2:1 to 4:1, home goods 1.5:1 to 3:1, all measured on gross-margin LTV.
  • Timing: about half of all repeat purchases happen inside the first 30 days, so the second-order window is where retention work pays back first.
  • Common mistake: modelling LTV over 36 months on revenue. It roughly doubles the number and justifies a CAC that never pays back.
Worked example. An apparel brand with $72 AOV, 60% gross margin, a 28% repeat rate, 2.2 additional orders per repeating customer, and $42 blended CAC. Lifetime orders are 1 + (0.28 x 2.2) = 1.62. Gross-margin LTV is 72 x 0.60 x 1.62 = $70. LTV:CAC is 70 / 42 = 1.7:1, below the 2:1 to 4:1 healthy range for apparel even though the 28% repeat rate sits inside its category band.
Source: Taylor Sicard, Taylor Sicard Consulting · Benchmarks reviewed June 2026 · Benchmarks and their sources: Subscription churn: passive vs active.
The method behind the number
Honest LTV, category bands, and the second-order window.
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The LTV math brands get wrong
Revenue vs margin LTV, the 12-month window, and the category benchmarks this calculator grades against.
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Subscription churn for DTC
If your revenue is subscription, churn is your LTV: the 3 to 5% monthly baseline and what moves it.
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The max allowable CAC formula
Where this LTV goes next: the ceiling on what you can pay to acquire a customer.
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Method

How LTV and repeat rate are calculated

All three steps use a 12-month window. Lifetime orders = 1 + (repeat rate x average additional orders per repeating customer). Gross-margin LTV = AOV x gross margin x lifetime orders, because CAC gets paid out of margin. Add your blended CAC and the result also grades LTV:CAC against the healthy range for your category: consumables 3.5:1 to 6:1, apparel 2:1 to 4:1, home goods 1.5:1 to 3:1. The 12-month CM-LTV targets work the same way: consumables 2.5 to 4x first-order contribution, apparel 1.8 to 3x, home 1.5 to 2.5x.

Repeat rate at or above your category bandConsumables 35-50%, apparel 20-30%, home 15-25%. LTV is real, so spend against it.
Within 5 points below the bandFix the second-order window first: half of all repeat purchases happen inside the first 30 days.
Well below the bandYou have a first-order business, so price CAC as if there is no LTV.

Your lifetime-orders number carries straight into the max allowable CAC tool, which turns this LTV into a spending ceiling, and the break-even ROAS calculator translates it into what your ads need to clear. All the free DTC calculators share these benchmarks and carry your AOV and margin forward.

Questions

Common questions

How do I calculate LTV for a DTC brand?
Twelve-month lifetime orders = 1 + (repeat rate x average additional orders per repeating customer). Multiply by AOV for revenue LTV, then by gross margin for the number that matters: gross-margin LTV. Model it on margin, because you cannot spend revenue you never keep.
What is a good repeat rate for DTC?
It is category-dependent: consumables and CPG run 35 to 50%, apparel 20 to 30%, home goods and durables 15 to 25%. Judge yourself against your category's band, not a blended average that mixes supplements with sofas.
What is the difference between revenue LTV, gross-margin LTV, and CM-LTV?
Revenue LTV counts every dollar a customer spends. Gross-margin LTV keeps only what survives COGS and payment fees. CM-LTV goes a layer deeper and subtracts fulfilment, shipping, and returns too. Each layer is more accurate than the last; CAC decisions should use a margin-based LTV at minimum.
What LTV:CAC ratio should I target?
3:1 on gross margin is the standard guardrail, but the healthy range shifts by category: consumables 3.5:1 to 6:1, apparel 2:1 to 4:1, home goods 1.5:1 to 3:1. The ranges reflect how much repeat behavior each category can bank on.
How fast should the second order come?
Fast. Half of all repeat purchases happen inside the first 30 days, so the post-purchase window does most of the work. If your second-order curve is still flat at day 45, the post-purchase experience is what to fix, because more ad spend will not.
Should subscription brands model LTV differently?
Yes. A subscription's LTV is monthly contribution divided by monthly churn, and 3 to 5% monthly churn is the DTC subscription baseline. The repeat-rate model in this calculator suits one-off purchase brands; if most of your revenue is subscription, churn is your LTV.