Customer Lifetime Value Calculator
The gross profit one customer brings in over their whole relationship with you, from order value, purchase frequency and margin, or from monthly revenue and churn, with an optional discount rate and CLV:CAC ratio.
Result…
How it's calculated
Orders: CLV = order value × purchases a year × margin × lifespan Discounted: CLV = yearly gross profit × (1 − (1 + d)^−years) ÷ d Subscription: CLV = revenue a month × margin ÷ churn (lifespan = 1 ÷ churn) Discounted: CLV = monthly gross profit ÷ (monthly discount + churn) CLV:CAC = CLV ÷ acquisition cost
Customer lifetime value is the gross profit you can expect from one customer before they stop buying. For repeat purchases it multiplies the profit from a year of orders by how many years customers stay. For subscriptions it uses churn: if 4% cancel each month, the average customer stays 1 ÷ 0.04 = 25 months. A discount rate counts later profit for less, which matters for long lifespans. Comparing CLV with the cost of winning a customer (see the customer acquisition cost calculator) shows whether growth pays for itself. All of it rests on averages from your own records; new businesses with little history should treat the result as a rough guide.
Your numbers, step by step
About the Customer Lifetime Value calculator
This customer lifetime value calculator estimates the gross profit one average customer brings in before they stop buying. Shops and other repeat-purchase businesses can start from order value, purchases a year, gross margin and how many years customers stay. Subscription businesses can start from monthly revenue per customer, margin and monthly churn, where the expected lifespan is 1 ÷ churn. An optional yearly discount rate counts later profit for less, and if you enter what it costs to win a customer you also get the CLV:CAC ratio and how long gross profit takes to pay that cost back. Founders, marketers and finance teams use it to set acquisition budgets and to see whether growth pays for itself. Every step is shown with your own figures, so you can see what the answer rests on.
How to use it
- Choose “Orders and lifespan” for repeat purchases, or “Monthly revenue and churn” for subscriptions.
- Enter the “Average order value” and “Purchases per customer a year”, or the “Revenue per customer a month” and “Monthly churn rate”.
- Enter your “Gross margin”, the share of revenue left after the direct cost of serving the customer.
- Optionally enter a “Discount rate a year” to value future profit in today's money.
- Enter the “Customer acquisition cost” to see the CLV:CAC ratio and the payback time.
Worked example
A subscription earns 40 a month per customer at a 70% gross margin, so each customer brings in 40 × 70% = 28 of gross profit a month. With 4% monthly churn the expected lifespan is 1 ÷ 0.04 = 25 months, so lifetime revenue is 1,000 and CLV = 28 ÷ 0.04 = 700. Winning a customer costs 200, giving a CLV:CAC ratio of 700 ÷ 200 = 3.5 : 1, and gross profit pays the 200 back in about 7.1 months.
Updated
Questions people ask
How do I calculate customer lifetime value?
Multiply the gross profit a customer brings in each year by the number of years they stay. For subscriptions, divide the monthly gross profit per customer by the monthly churn rate.
Should CLV use revenue or profit?
Profit is the more useful basis, because acquisition is paid for out of margin, not revenue. This calculator shows lifetime revenue as well, so you can see both.
What is the CLV to CAC ratio?
It compares the gross profit a customer brings in with what it cost to win them. Below 1 : 1 each new customer loses money. Work out the cost side with the customer acquisition cost calculator.
Why does a discount rate lower CLV?
Money received years from now is worth less than money today, so discounting counts each later month or year for a little less. The effect grows with longer lifespans and higher rates.
How reliable is a lifetime value estimate?
It is only as good as the averages behind it. A young business with little churn history, or customers who behave very differently from each other, can see real values far from the estimate. For pricing or funding decisions, check the figures with a finance professional.