Customer Lifetime Value (CLV/LTV) Calculator

What Is Customer Lifetime Value?

Customer Lifetime Value (CLV or LTV) is the total revenue you can expect from a single customer over the entire duration of your relationship. It's one of the most important metrics in business because it tells you how much a customer is actually worth — not just on their first purchase, but over months or years.

Knowing your CLV changes how you think about marketing spend, pricing, and customer service. If your average customer is worth $2,000 over their lifetime, spending $200 to acquire them is a great deal. Without CLV, you're making acquisition decisions blind.

How to Calculate CLV

The Basic Formula

CLV = Average Purchase Value x Purchase Frequency x Average Customer Lifespan. For example, if a customer spends $50 per order, orders 4 times per year, and stays for 5 years: $50 x 4 x 5 = $1,000 CLV.

With Profit Margins

For a more accurate picture, multiply by your gross margin. If your margin is 40%, that $1,000 CLV becomes $400 in actual profit. This "CLV profit" is what really matters for acquisition budgeting.

With Churn Rate

The churn-adjusted formula is: CLV = (Average Revenue per Customer per Month) / (Monthly Churn Rate). If you earn $100/month per customer and lose 5% of customers monthly: $100 / 0.05 = $2,000 CLV. This model is popular for subscription businesses.

CLV to CAC Ratio

Your CLV to CAC (Customer Acquisition Cost) ratio reveals whether your business model is sustainable:

• Below 1:1: You're losing money on every customer acquired. Fix retention or reduce acquisition costs immediately.
• 1:1 to 3:1: Barely sustainable. Focus on improving retention and increasing average order value.
• 3:1 to 5:1: Healthy range. You have a solid business model with room to grow.
• Above 5:1: You may be underinvesting in growth. Consider scaling marketing spend.

How to Increase Customer Lifetime Value

• Increase order value: Upsell, cross-sell, offer bundles, and introduce premium tiers
• Increase purchase frequency: Launch loyalty programs, send replenishment reminders, create recurring offers
• Improve retention: Better onboarding, proactive customer support, and engagement campaigns reduce churn
• Build community: Customers who feel connected to your brand stay longer. Social media engagement, exclusive groups, and user-generated content all help

Frequently Asked Questions

What is Customer Lifetime Value (CLV)?

CLV is the total revenue a business can expect from a single customer over the entire relationship. It factors in average purchase value, frequency, and customer lifespan. It helps determine how much to invest in acquiring and retaining customers.

How do you calculate CLV?

Basic formula: Average Purchase Value x Purchase Frequency x Average Customer Lifespan. For subscription businesses, divide average monthly revenue per customer by monthly churn rate. Factor in gross margin for profit-based CLV.

What is a good CLV to CAC ratio?

3:1 or higher is healthy. Below 1:1 means you're losing money per customer. Between 1:1 and 3:1 needs improvement. Above 5:1 might mean you're underinvesting in growth.

How can I increase CLV?

Four strategies: increase order value (upselling, bundles), increase purchase frequency (loyalty programs, reminders), improve retention (better onboarding, service), and reduce costs (operational efficiency).