Customer Lifetime Value (CLV) Calculator
Customer Lifetime Value (CLV) Calculator
CLV multiplies three numbers: how much a customer spends per purchase, how often they purchase per year, and how many years they typically stay a customer. The result tells you the total revenue one average customer generates — critical context for deciding how much you can afford to spend acquiring one (see our CAC Calculator).
Marketing and growth teams use CLV alongside CAC to judge whether an acquisition channel is actually profitable.
- Formula: CLV = Average Purchase Value × Purchase Frequency (per year) × Customer Lifespan (years).
- CLV:CAC ratio matters more than CLV alone: a common rule of thumb targets a ratio of at least 3:1 (CLV three times CAC) for a sustainable business model.
- This is a simplified model: more advanced CLV models discount future revenue for time value of money and factor in gross margin, not just revenue — use this as a directional estimate, not a precise forecast.
Should I use revenue or profit in this calculation?
This simplified formula uses revenue (average purchase value). For a margin-based view of true profitability per customer, multiply the CLV result by your gross margin percentage.
How do I estimate customer lifespan if I don't have historical data yet?
Use 1 ÷ your monthly churn rate to estimate average lifespan in months, then convert to years — or use an industry benchmark for your business type as a starting estimate.
Customer Lifetime Value (CLV) Calculator
CLV multiplies three numbers: how much a customer spends per purchase, how often they purchase per year, and how many years they typically stay a customer. The result tells you the total revenue one average customer generates — critical context for deciding how much you can afford to spend acquiring one (see our CAC Calculator).
Marketing and growth teams use CLV alongside CAC to judge whether an acquisition channel is actually profitable.
- Formula: CLV = Average Purchase Value × Purchase Frequency (per year) × Customer Lifespan (years).
- CLV:CAC ratio matters more than CLV alone: a common rule of thumb targets a ratio of at least 3:1 (CLV three times CAC) for a sustainable business model.
- This is a simplified model: more advanced CLV models discount future revenue for time value of money and factor in gross margin, not just revenue — use this as a directional estimate, not a precise forecast.
Should I use revenue or profit in this calculation?
This simplified formula uses revenue (average purchase value). For a margin-based view of true profitability per customer, multiply the CLV result by your gross margin percentage.
How do I estimate customer lifespan if I don't have historical data yet?
Use 1 ÷ your monthly churn rate to estimate average lifespan in months, then convert to years — or use an industry benchmark for your business type as a starting estimate.