Customer Lifetime Value (CLV) Calculator
Calculate customer lifetime value (CLV) over the entire relationship.
Use CLV to determine how much you can spend on customer acquisition costs.
Customer Lifetime Value
Customer Lifetime Value Formula
CLV = (Average Purchase Value × Purchase Frequency × Gross Margin) ÷ Churn Rate
Where:
- Average Purchase Value = total revenue ÷ number of purchases
- Purchase Frequency = purchases per customer per year
- Gross Margin = (revenue − COGS) ÷ revenue
- Churn Rate = % of customers lost per year
Healthy CLV:CAC ratio:
- 3:1 or higher is considered healthy (you earn 3× what you spend to acquire a customer)
- Below 1:1 = losing money on every customer
Example: $100 AOV × 4×/year × 60% margin ÷ 20% churn = $1,200 CLV