An online shop
Orders of 50, four times a year, for 3 years at a 40% margin: revenue 600 and CLV 240. With a CAC of 60, the ratio is 4:1.
Customer Lifetime Value Calculator
Estimate how much profit a customer brings over their lifetime, and compare it with acquisition cost.
Result
Enter your values and select Calculate to see the result.
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How the Customer Lifetime Value Calculator works
Customer lifetime value (CLV or LTV) estimates the gross profit a typical customer brings before they leave. Enter the average order value, how often customers buy each year, how many years they stay (or your yearly churn rate) and your gross margin. Add your customer acquisition cost (CAC) to see the CLV:CAC ratio.
Formulas
CLV
CLV = order value × purchases per year × years × gross margin
Lifespan from churn
years ≈ 1 ÷ yearly churn rate
Examples
Using churn
A yearly churn of 25% means customers stay about 4 years on average.
Frequently asked questions
What's a good CLV:CAC ratio?
Around 3:1 is a common target. Below 1:1 you lose money on each customer; far above 3:1 you may be under-investing in growth.
Why use margin, not revenue?
Revenue overstates value — the product and delivery cost money. Margin shows what you can spend to win a customer.
Is this model precise?
It's a simple average. Real customers vary, so segment by channel or plan for better decisions. Not financial advice.
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