Customer Lifetime Value Calculator
Calculate customer lifetime value (CLV) from order value, purchase frequency, and retention to determine sustainable acquisition budgets.
Average number of purchases per customer per year
Optional. Used to calculate LTV:CAC ratio.
Optional. Adjusts future revenue to present value.
Enter customer data and click calculate.
What This Calculator Does
This CLV calculator estimates the total revenue and profit a single customer generates over their entire relationship with your business. It factors in average order value, purchase frequency, customer lifespan, gross margin, and an optional discount rate for present value adjustment.
The Formula
Average order value multiplied by purchase frequency gives annual customer value. Multiplying by lifespan in years gives total revenue CLV. Applying gross margin converts revenue CLV to profit CLV. An optional discount rate adjusts future cash flows to present value.
Step-by-Step Example
Determine customer metrics
Average order value: $65. Purchase frequency: 4 times per year. Average customer lifespan: 3 years.
Calculate revenue CLV
$65 x 4 x 3 = $780 total revenue per customer over their lifetime.
Apply gross margin
At 60% gross margin: $780 x 0.60 = $468 profit CLV.
Set acquisition budget
Suggested max CPA is one-third of CLV: $468 / 3 = $156. With a $50 CAC, your LTV:CAC ratio is 9.4:1.
Real-World Use Cases
Marketing Budget Setting
Determine how much you can afford to spend acquiring a customer while maintaining profitability.
Business Valuation
CLV is a key input for valuating subscription and ecommerce businesses, especially for investor presentations.
Retention Investment
Quantify the value of extending customer lifespan by one year to justify investment in loyalty programs.
Common Mistakes to Avoid
Using revenue CLV instead of profit CLV for acquisition budget decisions. Only the profit portion is available to cover acquisition costs.
Assuming all customers have the same CLV. Segment customers by acquisition channel, product type, or behavior.
Not discounting future cash flows. Money received three years from now is worth less than money received today.
Overestimating customer lifespan. Use actual cohort data rather than assumptions when possible.
Frequently Asked Questions
Accuracy and Disclaimer
CLV calculations are estimates based on averages. Individual customer value varies significantly. Use actual customer data and cohort analysis for more precise calculations.
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