Customer Lifetime Value Calculator
Estimate customer lifetime value (CLV) from average purchase value, purchase frequency, gross margin, and churn rate.
Recommended Settings
Pro Tips
- •Average customer lifespan is estimated as 1 ÷ churn rate - a 5% annual churn rate implies an average lifespan of about 20 years
- •Gross margin is applied because CLV should reflect profit generated, not just revenue - a customer's raw spending overstates their actual value to the business
- •Compare CLV against customer acquisition cost (CAC) - a healthy business typically wants CLV to be several times higher than CAC
- •This uses a simplified CLV formula - more sophisticated models can incorporate discount rates for the time value of money
Most Popular
Most SaaS businesses use annual churn rate and margin figures to estimate CLV for unit economics analysis
When to Use This Tool
Determine how much you can afford to spend acquiring a new customer based on their expected lifetime value.
Evaluate whether your business model is sustainable by comparing CLV against acquisition costs.
Assess whether your CAC-to-CLV ratio is healthy across different marketing channels.
Present customer lifetime value as a key unit economics metric to investors.
How It Works
Multiply average purchase value by purchase frequency to get annual revenue per customer
Estimate average customer lifespan as 1 divided by the annual churn rate
Multiply annual revenue per customer by gross margin (to reflect profit rather than raw revenue) and by the estimated lifespan to get customer lifetime value
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Frequently Asked Questions
Why does gross margin matter for CLV?
CLV is meant to represent the actual profit a customer generates, not just their raw spending. Applying gross margin adjusts for the cost of delivering your product or service, giving a more accurate picture of a customer's true value.
How is customer lifespan estimated?
This tool estimates average lifespan as 1 divided by the churn rate (expressed as a decimal). For example, a 10% annual churn rate implies an average customer lifespan of about 10 years, assuming a constant churn rate over time.
What ratio of CLV to CAC is considered healthy?
A commonly cited benchmark for SaaS businesses is a CLV to customer acquisition cost (CAC) ratio of at least 3:1, meaning a customer should be worth at least three times what it costs to acquire them.
Is my data sent to a server?
No. All calculations happen instantly in your browser using JavaScript. Nothing you enter is transmitted anywhere.
Does this account for the time value of money?
No, this is a simplified CLV model that doesn't discount future revenue to present value. More advanced CLV models incorporate a discount rate to account for the fact that future profit is worth less than profit today.