Overview

The Customer Lifetime Value (CLV) Calculator estimates the total revenue a single customer generates throughout their relationship with a business. Knowing CLV helps determine an acceptable customer acquisition cost (CAC), optimize marketing budgets, and refine customer retention strategies.

Formula

CLV = Average Purchase Value × Average Purchase Frequency per Year × Average Customer Lifespan (years)
Or: CLV = (Average Purchase Value × Purchase Frequency × Margin) ÷ Churn Rate

How to Use

1. 1Enter the average transaction value per customer.
2. 2Enter the average number of purchases per year.
3. 3Enter the average customer lifespan in years.
4. 4Optionally add margin rate and churn rate.
5. 5Click 'Calculate' to see the CLV.

Tips

• ✔A healthy business typically has CLV at least 3x greater than CAC.
• ✔Segment CLV by customer group for more targeted VIP management.
• ✔For subscription models, simply multiply monthly fee by average subscription duration.
• ✔Reducing churn is the most effective way to increase CLV.
• ✔Apply a discount rate to convert future value into present value.

FAQ