Customer Lifetime Value (CLV) Calculator

CLV estimates what a customer is worth over the whole relationship — the number that sets how much you can rationally spend to acquire one. Enter order value, frequency and lifespan; add margin and CAC for the ratios investors ask about.

How to use this calculator

Enter average order value, purchases per year and expected lifespan in years.
Add gross margin to get profit-based CLV — the honest version.
Add CAC to see the LTV:CAC ratio and payback period.

Formula used

CLV = AOV × purchases/year × lifespan (× margin for profit CLV)

For subscriptions, an equivalent shortcut: CLV = monthly revenue per customer × gross margin ÷ monthly churn. Lifespan itself is 1 ÷ churn — a 3%/month churn implies ~33 months. Profit CLV, not revenue CLV, is what you may spend against.

Example calculation

Worked example

AOV 1,200, 4 purchases/year, 3-year lifespan: revenue CLV = 14,400; at 40% margin, profit CLV = 5,760.

Against a CAC of 900 that's a 6.4 : 1 ratio with ~6-month payback — comfortably above the 3:1 healthy benchmark.

The number that sets your ad budget

CLV answers the acquisition question every business faces: what can we afford to pay for a customer? Compare on profit CLV (revenue CLV flatters), and the folklore benchmark is LTV:CAC ≥ 3:1 — below it, growth burns cash; far above it, you're likely under-investing in growth.

The model's soft spot is lifespan: it's a forecast, not a fact, and averages hide segments. A cohort view (what customers acquired in month X actually spent over time) is the empirical check on any CLV formula — and retention improvements move CLV more powerfully than order-value ones, because they extend the whole stream.

Why use this calculator?

Set a rational CAC ceiling instead of guessing ad budgets.
See profit CLV and payback — the versions that survive due diligence.
Quantify what retention improvements are worth before building loyalty programs.

Frequently asked questions

What is a good LTV to CAC ratio?

The common benchmark is 3:1 on gross-profit LTV. Below ~1.5:1, acquisition destroys value; above ~5:1, many operators argue you're growing too slowly and could bid more aggressively.

How do I estimate customer lifespan?

From churn: lifespan ≈ 1 ÷ churn rate. If 25% of customers lapse yearly, average lifespan is ~4 years. For young businesses without history, use conservative estimates and update with cohort data.

Should CLV use revenue or profit?

Profit (revenue × gross margin) for any spending decision — you acquire customers with profit dollars, not revenue dollars. Revenue CLV is fine for tracking relative changes over time.