Customer Lifetime Value Calculator
Estimate what a typical customer is worth over time from their average purchase, how often they buy and how long they stay. Add your gross margin to see the gross-profit version.
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Your result
Enter an average purchase value, how often customers buy and how long they stay to see their estimated lifetime value.
What this means
How the CLV calculation works
Customer lifetime value (CLV) estimates how much a customer is worth to your business over the whole time they buy from you. This calculator uses a deliberately simple version so every step is visible.
Worked examples
These figures are made up to show the arithmetic. They are not a benchmark.
- Average purchase value: 50. Purchases per year: 4. Customer lifespan: 3 years.
- Revenue per year = 50 x 4 = 200.
- Revenue-based CLV = 200 x 3 = 600.
- With a 40% gross margin: 600 x 0.40 = 240 in gross profit.
- Average purchase value: 30 a month, so 12 purchases per year. Average lifespan: 1.5 years.
- Revenue-based CLV = 30 x 12 x 1.5 = 540.
- With a 70% gross margin: 540 x 0.70 = 378.
Estimating customer lifespan
The hardest input is the lifespan, especially for a young business. If you have customer records, look at how long customers who have left stayed active. If you only know your yearly churn rate, you can use a rough approximation:
This is only an approximation and it assumes churn stays steady. To understand why customers leave, read our guide to analyzing churn.
Using CLV with CAC
CLV becomes useful when you set it beside the cost of winning a customer. Calculate that cost with the Customer Acquisition Cost Calculator, then compare your CAC with the gross-profit CLV. If a customer's lifetime gross profit is clearly higher than what you spent to win them, the model has room to work. If it is close or lower, fix the economics before you spend more. Our article on unit economics explains the whole picture.
What this calculator cannot tell you
- Averages hide differences. Your best customers may be worth many times more than your average one. Consider calculating CLV for different groups.
- No discounting. Money earned in three years is worth less than money earned today. This simple version ignores that.
- Acquisition and service costs. CLV does not subtract what you spent to win or serve the customer. Compare it with CAC.
- Early estimates are rough. If your business is new, treat the lifespan as a guess and update it as real data comes in.
Ways to raise customer lifetime value
You can raise any of the three inputs. Encourage larger or more frequent purchases, for example with a sensible bundle or a reason to come back. Extend the relationship by keeping customers happy: see customer retention and surprise and delight. Or improve your margin on each sale with the Profit Margin Calculator.
Related tools and reading
Frequently asked questions
Should I use revenue-based or gross-profit CLV?
Gross-profit CLV is usually more useful, because it shows what is left after the direct cost of what you sold. Revenue-based CLV is simpler and does not need a margin, so the calculator shows it first.
What lifespan should I use if my business is new?
Use a cautious estimate based on the customers you already have, and update it as more customers stay or leave. Do not borrow a lifespan from a different kind of business.
Does CLV include the cost of winning the customer?
No. CLV is the value a customer brings. Compare it with your acquisition cost, which you can calculate separately.
How often should I recalculate CLV?
At least once or twice a year, and whenever your prices, product or customer behavior change in a meaningful way.