Customer Lifetime Value (CLV) Calculator
Estimate what one customer is worth over their lifetime. Add your acquisition cost to get the LTV to CAC ratio.
How this CLV is calculated
This uses the simple formula: average order value x purchases per year x years as a customer x gross margin. 3,000 x 3 x 4 x 45% gives 16,200 of gross profit per customer.
It assumes steady behavior. Real customers churn unevenly, so treat the result as a planning estimate. Use data from a cohort of real customers where you can.
Compare CLV to acquisition cost. If a customer is worth 16,200 and costs 4,000 to win, you have room to spend more on growth.
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Common questions
What is customer lifetime value?
The total gross profit you expect from one customer over the full relationship.
How do I calculate CLV?
Average order value x purchases per year x customer lifespan in years x gross margin.
What is a good LTV to CAC ratio?
Many teams use 3:1 as a rule of thumb. The right ratio depends on margin, payback time and cash.
Should I use revenue or profit?
Profit. Revenue-based CLV overstates what you can afford to spend to acquire a customer.
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