Calculating LTV involves several steps and can vary depending on the business model. A common formula is: LTV = (Average Purchase Value) x (Number of Purchases per Year) x (Customer Lifespan in Years) For example, if a customer spends an average of $100 per purchase, makes 5 purchases per year, and stays with the business for 3 years, the LTV would be: LTV = $100 x 5 x 3 = $1500