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Customer Lifetime Value Calculator

Customer lifetime value (CLV or LTV) is the gross profit you can expect from one customer over the whole time they stay with you. Enter average purchase value, how often they buy, how long they stay — or your churn rate — and your margin. Add acquisition cost to get the LTV to CAC ratio.

Quick examples
$

Use 12 for a monthly subscription.

years
%
$
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Customer lifetime value$600.00

Gross profit over the customer’s lifetime

Lifetime revenue
$1,000.00
Lifespan
5 years
LTV : CAC ratio
7.5 : 1
Value after acquisition cost
$520.00

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      Formula

      Lifetime revenue = average purchase value × purchases per year × lifespan in years
      Customer lifetime value = lifetime revenue × gross margin
      Lifespan from churn = 1 ÷ annual churn rate
      LTV : CAC = customer lifetime value ÷ customer acquisition cost

      How to use it

      1. Enter what a customer spends on an average purchase.
      2. Enter how many times a year they buy.
      3. Enter how many years a customer typically stays, or switch to churn rate.
      4. Enter your gross margin and, optionally, what it costs to acquire a customer.

      Worked examples

      $50 purchases four times a year for five years, at a 60% margin and $80 to acquire

      Lifetime revenue
      $1,000.00
      Customer lifetime value
      $600.00
      LTV : CAC ratio
      7.5 : 1
      Value after acquisition cost
      $520.00

      A $30-a-month subscription with 25% annual churn, 80% margin and a $300 acquisition cost

      Lifespan
      4 years
      Lifetime revenue
      $1,440.00
      Customer lifetime value
      $1,152.00
      LTV : CAC ratio
      3.84 : 1
      Value after acquisition cost
      $852.00

      Use profit, not revenue

      A customer who spends $1,000 with you is not worth $1,000 — you had to supply what they bought. Multiplying by gross margin gives the figure you can sensibly compare with acquisition cost. At a 60% margin, $1,000 of lifetime revenue is a $600 lifetime value.

      The LTV to CAC ratio

      A widely used benchmark is 3:1 — a customer should be worth about three times what it cost to win them. Below 1:1 you lose money on every customer. Much above 5:1 often means you could afford to spend more on growth.

      This is a simple model: it assumes steady spending, ignores the time value of money and treats every customer as average. It is a planning estimate, and it is most useful when calculated separately for each customer segment or channel.

      Questions people ask

      How do you calculate customer lifetime value?

      Multiply average purchase value by purchases per year and by the years a customer stays, then by your gross margin. $50 × 4 × 5 years = $1,000 of revenue; at a 60% margin the CLV is $600.

      How do I get customer lifespan from churn?

      Divide 1 by the churn rate. A 25% annual churn rate means the average customer stays 4 years; a 5% monthly churn rate means 20 months.

      What is a good LTV to CAC ratio?

      Around 3:1 is the usual target. A $600 lifetime value against an $80 acquisition cost is 7.5:1, which suggests room to invest more in acquiring customers.

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