Customer Lifetime Value (CLV) Calculator
Enter what a customer spends, how often they buy and how long they stay. The calculator shows the lifetime value of a customer and compares it with what it cost you to win them.
How to use this Customer Lifetime Value (CLV) Calculator
- Enter the average amount a customer spends on one order.
- Enter how many times a year a typical customer buys.
- Enter how many years they usually stay. Use your own churn data if you have it.
- Enter your gross margin so the result shows profit and not just revenue.
- Add your CAC to see the LTV to CAC ratio, then press Calculate.
How to calculate customer lifetime value
A simple CLV multiplies what a customer spends by how long they stay, then applies your margin.
- Lifetime revenue = order value x purchases per year x lifespan
- CLV (gross profit) = lifetime revenue x gross margin
- LTV to CAC = CLV / customer acquisition cost
- Net value = CLV – CAC
Worked example
A customer spends $60 per order, buys 4 times a year and stays for 3 years. Lifetime revenue is 60 x 4 x 3 = $720.00. At a 40% gross margin the lifetime value is $288.00, or $96.00 per year. If it cost $50 to win that customer, the LTV to CAC ratio is 5.76 to 1, and the net value after CAC is $238.00.
Many teams look for a ratio of about 3 to 1 or better, but this is a rule of thumb, not a law. A very high ratio can also mean you are not spending enough on growth. Test how the result changes if the lifespan drops by a year, or if the margin slips, because small changes in either one move the answer a lot. Use real churn data when you have it, since a fixed lifespan is only an average.
Assumptions & limits
- The model assumes a fixed lifespan and a steady order value and frequency. Real customers leave at different times and may spend more or less over time.
- It uses gross margin, so it ignores support, returns and overhead unless you include them in the margin.
- There is no discount rate, so future profit is counted at full value.
- The 3 to 1 ratio is a common guide, not a standard. Your own cash and growth goals matter more.
- New customers should be grouped by channel or cohort for the best results.
Frequently asked questions
How do I calculate customer lifetime value?
Multiply the average order value by the purchases per year and the years a customer stays, then multiply by your gross margin.
What is the LTV to CAC ratio?
It is the lifetime profit from a customer divided by what it cost to win them. A higher ratio means each customer pays back more.
What is a good LTV to CAC ratio?
Many teams aim for about 3 to 1 or higher, but the right target depends on your margins and cash.
Should CLV use revenue or profit?
Profit is more useful because it shows what you keep. The calculator shows both.
How do I estimate customer lifespan?
Use the average time customers keep buying, or divide one by your yearly churn rate.
Does CLV change over time?
Yes. Recalculate when your prices, margins or retention change.
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Last updated: November 2026