Business Tools
Customer Lifetime Value Calculator
Calculate Customer Lifetime Value (CLV/LTV) for business growth planning. Determine the total value a customer brings over their entire relationship with your company.
Use Customer Lifetime Value Calculator to get instant results without uploads or sign-ups. Everything runs securely in your browser for fast, reliable output.
Your results will appear here.
About this tool
Customer Lifetime Value (CLV or LTV) represents the total revenue a business can expect from a single customer throughout their entire relationship. It's calculated as: CLV = Average Purchase Value × Purchase Frequency × Customer Lifespan. Understanding CLV is critical for sustainable growth because it tells you how much you can afford to spend acquiring customers while remaining profitable.
CLV is one of the most important business metrics because it shifts focus from one-time transactions to long-term customer relationships. A customer who spends $50 once isn't as valuable as one who spends $30 monthly for 3 years ($1,080 total). CLV helps justify marketing spend—if CLV is $1,000, you might profitably spend $200-300 to acquire that customer. Without knowing CLV, businesses often overspend or underspend on acquisition.
The calculation can be simple (as in our calculator) or complex depending on your business model. Advanced CLV considers profit margins, discount rates, churn rates, and varying purchase patterns. However, even a basic CLV calculation provides valuable insights for decision-making. The key is understanding the relationship between CLV and Customer Acquisition Cost (CAC)—a healthy ratio is CLV:CAC of 3:1 or higher.
Businesses use CLV to segment customers by value, prioritize retention efforts, set appropriate acquisition budgets, develop loyalty programs, and make strategic decisions about product development and pricing. SaaS companies, subscription services, e-commerce businesses, and service providers all rely on CLV to guide growth strategy and resource allocation. Increasing CLV through retention, upselling, and cross-selling is often more profitable than acquiring new customers.
Usage examples
Subscription Software (SaaS)
$50/month, 12 purchases/year, 3 year average lifespan
$50 × 12 × 3 = $1,800 CLV
Coffee Shop
$6 per visit, 100 visits/year, 5 year loyalty
$6 × 100 × 5 = $3,000 CLV
E-commerce Fashion
$80 per order, 4 orders/year, 2 year customer
$80 × 4 × 2 = $640 CLV
Gym Membership
$40/month, 12 payments/year, 2.5 year average
$40 × 12 × 2.5 = $1,200 CLV
B2B Service
$500/month contract, 12 months/year, 4 year retention
$500 × 12 × 4 = $24,000 CLV
How to use
- Enter the average purchase value per transaction.
- Enter the average number of purchases per year.
- Enter the average customer lifespan in years.
- Click "Calculate" to see Customer Lifetime Value.
- View total CLV and monthly/annual revenue per customer.
- Use CLV to inform customer acquisition cost decisions.
Benefits
- Calculates total customer value over entire relationship
- Helps determine how much to spend on customer acquisition
- Essential for sustainable growth and profitability
- Guides marketing budget allocation across channels
- Identifies high-value customer segments for targeting
- Justifies investment in retention and loyalty programs
- Enables comparison of acquisition channels by customer quality
- Critical metric for investor presentations and valuations
- Helps prioritize product features and service improvements
- Informs pricing strategy and upselling opportunities
- Free alternative to expensive analytics platforms
- Simple tool for quick CLV estimation and planning
FAQs
What is a good Customer Lifetime Value?
"Good" CLV depends on your Customer Acquisition Cost (CAC). The ideal ratio is CLV:CAC of 3:1 or higher—meaning customer lifetime value should be at least 3x what you spend to acquire them. If CAC is $200, aim for CLV of $600+. Higher ratios indicate more profitable customer relationships and sustainable growth potential.
How is CLV different from customer acquisition cost?
CLV measures the total revenue/profit from a customer over time. CAC measures the cost to acquire that customer (marketing, sales, advertising costs ÷ new customers). They work together: CLV tells you the value you're getting, CAC tells you the cost you're paying. Profitable businesses maintain CLV significantly higher than CAC—ideally 3:1 ratio or better.
Should I use revenue or profit in CLV?
This calculator uses revenue, which is simpler and common for basic CLV. However, profit-based CLV is more accurate for business decisions—multiply revenue by profit margin. If average purchase is $100 with 40% margin, use $40 for calculations. Profit-based CLV shows actual value after costs and better informs acquisition spending limits.
How do I increase Customer Lifetime Value?
Five strategies: (1) Improve retention—keep customers longer through better service and engagement, (2) Increase purchase frequency—encourage repeat purchases with subscriptions or loyalty programs, (3) Increase average order value—upsell and cross-sell, (4) Reduce churn—identify at-risk customers and intervene, (5) Enhance customer experience—satisfied customers buy more and stay longer. Focus on retention first—it's typically easier than acquisition.
How do I calculate average customer lifespan?
For existing businesses: analyze historical data to find average time from first to last purchase. For subscription models: 1 ÷ Churn Rate. If 10% of customers leave monthly, average lifespan is 1 ÷ 0.10 = 10 months. For new businesses, use industry benchmarks initially, then refine with actual data. Track cohorts over time for accurate measurement.
Does CLV apply to all business types?
CLV is most valuable for businesses with repeat customers: subscriptions, retail, professional services, software, memberships. It's less applicable for one-time high-ticket purchases (wedding photography, real estate transactions). However, even "one-time" businesses often have referrals and repeat business—track these to calculate true CLV including downstream value.
How often should I recalculate CLV?
Review CLV quarterly or when significant changes occur: price changes, new products, retention program launches, or major market shifts. Track CLV trends over time—improving CLV indicates strengthening customer relationships. Calculate CLV by customer segment (acquisition channel, product line, demographic) to identify most valuable customer types.
What's the relationship between CLV and business valuation?
Investors and acquirers heavily weight CLV when valuing companies, especially SaaS and subscription businesses. High CLV relative to CAC indicates efficient growth and strong unit economics. Companies with CLV:CAC ratios of 3:1+ and high CLV generally command premium valuations because they demonstrate sustainable, profitable growth potential. CLV improvement directly increases company value.
Related tools
View all toolsAppointment Calculator
Calculate appointment scheduling and time slots. Estimate daily appointment capacity and booking optimization.
Business ToolsBarcode Generator
Create barcodes online for free. Generate UPC, EAN, Code 128, QR codes and more. Free barcode maker for products and inventory.
Business ToolsBreak-Even Point Calculator
Calculate break-even point for businesses. Find out how many units you need to sell to cover all costs. Essential for pricing strategy, business planning, and profitability analysis.
Business Tools