Customer Lifetime Value Calculator (CLV)
How much is each customer worth to your business? Calculate simple CLV, model retention-based lifetime value with churn, or compare CLV against your customer acquisition cost. Works with any currency.
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How to Use This Calculator
Tab "Simple CLV"
Enter the average purchase value, purchase frequency per year, and customer lifespan in years. The calculator multiplies these three numbers to give you a straightforward Customer Lifetime Value. Best for e-commerce and retail businesses with predictable repeat purchases.
Tab "With Retention"
Enter average monthly revenue per customer, gross margin percentage, and monthly churn rate. The calculator divides monthly gross profit by the churn rate to produce a retention-based CLV. It also shows the average customer lifespan implied by your churn rate. Best for SaaS and subscription businesses.
Tab "CLV vs CAC"
Enter your Customer Lifetime Value (from Tab 1 or Tab 2) and your Customer Acquisition Cost. The calculator computes the LTV:CAC ratio and payback period, with benchmarks to tell you whether your unit economics are healthy, unsustainable, or leaving growth on the table.
The Formulas
CLV = Average Purchase Value × Purchase Frequency × Customer Lifespan
CLV with churn (retention-based):
CLV = (Average Monthly Revenue × Gross Margin) / Monthly Churn Rate
Average customer lifespan:
Lifespan (months) = 1 / Monthly Churn Rate
LTV:CAC Ratio:
LTV:CAC = Customer Lifetime Value / Customer Acquisition Cost
Payback period:
Payback (months) = CAC / (Monthly Revenue × Gross Margin)
All calculations use standard customer lifetime value models. No country-specific tax rates are applied. Results are pre-tax estimates.
Worked Examples
Example 1 — E-commerce: $50/order, 4x/year, 3 years
An online retailer averages $50 per order. Customers buy about 4 times a year and remain active for 3 years.
Each customer is worth $600 over their lifetime. If acquisition costs are under $200, the business has healthy unit economics.
Example 2 — SaaS: $99/mo, 70% margin, 4% monthly churn
A SaaS company charges $99/month with a 70% gross margin and loses 4% of customers each month.
Each customer is worth $1,733 in gross profit over their lifetime. Reducing churn from 4% to 2% would double CLV to $3,465.
Example 3 — CLV $1,733 vs CAC $500
Using the SaaS CLV from Example 2, the company spends $500 to acquire each new customer.
A 3.5:1 ratio with a 7.2-month payback is solid. The company recoups its acquisition cost in under 8 months and earns profit for the remaining 17+ months of the customer relationship.
Understanding Customer Lifetime Value
What Is CLV?
Customer Lifetime Value (CLV or LTV) is the total revenue or profit a business can expect from a single customer account over the entire duration of their relationship. It is one of the most important metrics in business because it tells you how much you can afford to spend to acquire and retain customers.
Why CLV Matters
CLV drives three critical business decisions: (1) how much to spend on customer acquisition (CAC should always be a fraction of CLV), (2) which customer segments to prioritize (high-CLV segments deserve more investment), and (3) whether to focus on acquisition or retention (when CLV is low due to churn, improving retention often yields higher returns than acquiring new customers).
Simple vs Retention-Based CLV
The simple model works well for businesses with predictable repeat purchases — e-commerce, retail, restaurants. The retention-based model is better for subscription businesses where churn rate directly determines how long customers stay. Both are simplified models; more advanced approaches use cohort analysis, discount rates, and probabilistic models.
The Power of Reducing Churn
Small improvements in churn have an outsized impact on CLV. Cutting monthly churn from 5% to 4% increases average lifespan from 20 months to 25 months — a 25% improvement. Cutting from 4% to 2% doubles lifespan and doubles CLV. This is why retention is often called the most powerful lever in subscription businesses.
Limitations
These models assume: (1) purchase behavior or churn rate stays constant over time, (2) gross margin is stable, (3) no discount rate is applied to future revenue. In reality, customer behavior changes, margins fluctuate, and a dollar earned three years from now is worth less than a dollar today. Use CLV as a directional guide, not an exact prediction.