The calculator Lifetime value and payback
1.0 = they never repeat; must be at least 1
What a customer is worth
When a customer covers what they cost to win
The line is the contribution a customer has brought in after each order (the order value less platform and processing fees, before your other costs); the dashed line is what it cost to win them. Where the line crosses it, they've covered that cost. It assumes every order is the average order — real customers vary. Hover the chart for any order, or open the table under it.
Know when a customer pays you back before you scale — it's the cohort economics in Digital Products: Advanced →
How to read it Contribution, not revenue — and payback, not just value
Everything here runs on contribution: what actually reaches you after the platform's cut, not the headline price. A customer's lifetime value is that contribution multiplied by how many times they buy over their life with you. But value alone can bankrupt you if it arrives too slowly — which is why payback is the number that governs how fast you can grow.
The formulas
Contribution per order = average order value × (1 − fee%). Lifetime value = contribution per order × lifetime orders. Payback is the book's definition: the point at which a customer's cumulative contribution covers what they cost to acquire. If your first-order contribution already exceeds the acquisition cost, they are recouped in the first order — the strongest position there is. Otherwise it is measured in months, at your repeat cadence.
A worked example
£44 average order at 6.5% keeps £41.14 of contribution. If a customer buys 1.45 times over their life, their lifetime value is £41.14 × 1.45 = £59.65. If they cost £28.80 to acquire, that is less than the £41.14 they contribute on the very first order — so they are recouped in the first order, and you can spend up to your ceiling with nothing at risk beyond it.
Edge cases the calculator handles
- A customer who never repays — if even their whole lifetime value stays below what they cost to acquire, payback reads "does not pay back over their life" rather than a made-up month count. That is the signal to fix the offer or lower the acquisition cost.
- A fee of 100% or more leaves no contribution, so every line shows "—": there is nothing to have a lifetime value of.
Common questions
Why must lifetime orders be at least 1?
Because every acquired customer has, by definition, bought at least once — that is what made them a customer. A figure below 1 is not possible, so the calculator holds the floor at 1.0 (which represents a customer who never comes back).
Should I set my ad budget from lifetime value?
Careful — no. Paying up to lifetime value assumes a future that has not happened yet. Spend against first-order contribution until a real paid cohort proves its own payback. The CAC ceiling calculator works out the safe number.
Can I keep a copy?
Download the spreadsheet — it turns your own sales history into lifetime value and a payback period.
It is from Digital Products — Advanced, the third ePORTS book — the one about making a working range worth more, and making it durable.
Get the full Digital Products series →