What is the CLV formula used here?

CLV = Average Order Value × Purchase Frequency (per year) × Customer Lifespan (years). If you enter a profit margin, the profit-based CLV multiplies the result by that margin percentage.

What is a good Customer Lifetime Value?

It depends on your industry and business model. As a general rule, your CLV should be at least 3× your Customer Acquisition Cost (CAC). A CLV:CAC ratio below 1:1 means you are losing money on every customer.

How do I estimate purchase frequency?

Divide your total number of orders in a period by your number of unique customers in that same period. For example, 1,200 orders from 400 customers = 3 purchases per customer per year.

How do I estimate customer lifespan?

A simple method is 1 ÷ churn rate. If 20% of customers leave each year, your average lifespan is 1 ÷ 0.20 = 5 years. Check your CRM or analytics platform for historical churn data.

What is the difference between CLV and LTV?

CLV (Customer Lifetime Value) and LTV (Lifetime Value) are used interchangeably. Some marketers use LTV broadly while CLV specifically refers to individual customer value — but the underlying formula is the same.

Should I use revenue CLV or profit CLV?

Profit CLV is more meaningful for business decisions because it shows how much you actually keep after costs. Revenue CLV is useful for setting gross acquisition budgets, while profit CLV ensures you stay profitable after COGS and operating expenses.

Customer Lifetime Value Calculator

Name: Customer Lifetime Value Calculator
Availability: InStock
Author: Nham Vu

Enter your average order value, purchase frequency, and customer lifespan to calculate how much each customer is worth over their lifetime.

Your Business Inputs

Average Order Value (AOV)

Typical amount a customer spends per purchase

Purchase Frequency (per year)

Average number of purchases per customer per year

Customer Lifespan (years)

Average number of years a customer stays active

Profit Margin % (optional)

Your net profit margin — used to calculate profit-based CLV

Customer Acquisition Cost (CAC) (optional)

What it costs you to acquire one new customer

Results

Customer Lifetime Value (CLV)

$900.00

Revenue per customer over their lifetime

Annual Customer Value

$300.00

Per-Transaction Value

$75.00

Formula Breakdown

CLV = $75.00 × 4 × 3 = $900.00

Max Recommended Acquisition Cost

Conservative (1:3)

$300.00

Balanced (1:2)

$450.00

Aggressive (1:1)

$900.00

A CLV:CAC ratio of 3:1 is the widely recommended benchmark for healthy unit economics.

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Summary

Enter your average order value, purchase frequency, and customer lifespan to calculate how much each customer is worth over their lifetime.

How it works

Enter your average order value — the typical amount a customer spends per transaction.
Enter purchase frequency — how many times a customer buys per year on average.
Enter customer lifespan — the average number of years a customer stays active.
Optionally enter your profit margin percentage to see CLV based on profit, not just revenue.
The calculator instantly shows CLV, annual customer value, and recommended maximum acquisition cost.

Use cases

Set a data-driven maximum customer acquisition cost (CAC) budget.
Compare CLV across different product lines or customer segments.
Justify investment in loyalty programs by quantifying retention value.
Determine when a subscription model becomes more profitable than one-time sales.
Benchmark against industry CLV averages to identify growth opportunities.
Forecast long-term revenue from your current customer base.
Evaluate the ROI of upselling and cross-selling initiatives.
Align sales and marketing teams around a shared customer value metric.

Frequently Asked Questions

Last updated: 2026-06-10 · Reviewed by Nham Vu