Customer Lifetime Value Calculator
Work out how much gross profit a typical customer brings in over their lifetime, how long they stay, and whether your acquisition spend pays off. Free, no sign-up.
Average revenue per account (ARPA) each month.
Revenue left after the direct cost of serving the customer.
Share of customers lost each month.
Optional. Sales and marketing spend per new customer.
A common rule of thumb is a CLV to CAC ratio of at least 3 : 1. Below 1 : 1 each new customer costs more to win than they ever pay back. Well above 5 : 1 can mean you are under-investing in growth.
Free. No sign-up. Everything is calculated in your browser, nothing you enter is sent anywhere.
How it's calculated
- Average lifespan
- Lifespan (months) = 1 / monthly churn rate
- Customer lifetime value
- CLV = revenue per month x gross margin % x lifespan (months)
- Per-purchase revenue
- Revenue per month = average order value x purchases per year / 12
- Ratio and payback
- CLV : CAC = CLV / CAC Payback (months) = CAC / monthly gross profit
Worked examples
Customer lifetime value examples
Four businesses, and what their numbers say about how much they can spend to win a customer.
A $50 a month plan with healthy margins.
$50 per month, 80% gross margin, 5% monthly churn, $200 CAC.
Customers stay 20 months on average (1 / 5%). CLV is $50 x 80% x 20 = $800. CLV to CAC is 4 : 1 and CAC pays back in 5 months.
A store where customers buy a few times a year.
$60 average order, 5 orders a year, 40% margin, 36 month lifespan, $90 CAC.
$60 x 5 / 12 is $25 a month in revenue, $10 in gross profit. Over 36 months CLV is $360, a 4 : 1 ratio on a $90 CAC.
A low-priced plan that loses customers quickly.
$30 per month, 70% margin, 10% monthly churn, $250 CAC.
Customers last 10 months, so CLV is $210. At 0.84 : 1 every new customer costs more to win than they will ever return.
The SaaS example again, with churn cut from 5% to 4%.
$50 per month, 80% margin, 4% monthly churn.
Lifespan rises from 20 to 25 months and CLV from $800 to $1,000. A single point of churn is worth 25% more value per customer.
Benchmarks
How to read your CLV
Rules of thumb for judging whether your lifetime value is healthy. They are starting points, not laws.
Aim for a CLV to CAC ratio of 3 : 1 or better
The most quoted rule of thumb. Below 1 : 1 growth loses money. Far above 5 : 1 often means you could afford to spend more on acquisition.
Earn back CAC inside about 12 months
Payback period shows how long cash is tied up in each new customer. Shorter paybacks make growth far easier to fund.
Churn is usually the biggest lever
Lifespan is 1 divided by churn, so small churn improvements compound. Cutting churn from 5% to 4% adds 25% to lifetime value.
Use gross margin, not revenue
Revenue-based CLV flatters businesses with high delivery costs. Margin-based CLV is the number you can safely compare against CAC.
FAQ
Questions people ask
How do you calculate customer lifetime value?
Multiply the average revenue a customer brings in each month by your gross margin, then by how many months they stay. If you know monthly churn instead of lifespan, the average lifespan is 1 divided by the churn rate.
What is the difference between CLV and LTV?
Nothing, in practice. Customer lifetime value (CLV or CLTV) and lifetime value (LTV) are different names for the same metric.
What is a good CLV to CAC ratio?
3 : 1 is the common rule of thumb for a healthy business. Between 1 : 1 and 3 : 1 is thin, and below 1 : 1 you lose money on each customer.
Should I use revenue or gross margin?
Gross margin, if you want to compare CLV with acquisition cost. Revenue-based CLV is sometimes quoted, but it ignores what it costs to serve the customer. Set margin to 100% if you want the revenue figure.
How do I calculate CLV for one-off purchases?
Switch revenue to "per purchase", enter your average order value and how many times a typical customer buys in a year. The calculator turns that into monthly revenue and applies your lifespan or churn.
Is anything I enter stored?
No. The calculator runs entirely in your browser. Nothing you type is sent to a server or saved.
More free tools
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