Customer Lifetime Value Calculator
Two lifetime values at once: total revenue, and the gross profit that actually pays for your advertising.
Revenue-based CLV
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Total revenue across the customer relationship. Flattering in a deck, misleading in a bid strategy.
Profit-based CLV
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What the customer is actually worth to you: gross profit. This is the figure your acquisition cost has to clear.
Unlocks the LTV:CAC verdict below.
LTV:CAC verdict
Cumulative customer value
Profitable from purchase
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The curve shows cumulative gross profit per purchase. With a CAC entered, the dashed line marks the purchase at which the customer has paid for their own acquisition.
Revenue or margin: what is customer lifetime value actually measuring?
Most calculators hand you a single number, and it is the revenue one: everything a customer will ever pay you. That figure is fine for a board slide and useless for a bid, because you do not buy advertising with revenue — you buy it out of what survives the cost of goods. Hold your acquisition cost against the profit CLV instead, and the comparison is between two numbers measured in the same currency of reality.
Revenue CLV = AOV × purchases per customer
Gross profit per purchase = AOV × (margin ÷ 100)
Profit CLV = gross profit per purchase × purchases per customer
CLV calculation with three numbers, not four
The common formula multiplies order value by purchase frequency by customer lifespan, then adjusts for margin — four inputs. Frequency times lifespan is simply the number of lifetime purchases, so this calculator asks for that directly. Same result, one field fewer. A customer buying four times at an $80 average order value on a 45 % margin:
The $144 is the number that belongs in your planning. Against a CAC of $48 that leaves an LTV:CAC of 3.0:1 — on the profit figure, not the revenue one. Note what the revenue CLV would have suggested: room for a $100 acquisition cost, at which this customer would in fact lose you money.
A healthy CLV is a ratio, not an amount
There is no lifetime value that is good in isolation. A $60 CLV is excellent if customers cost you $15 and ruinous if they cost you $80, so the only useful reading is profit CLV against CAC — and 3× or better is the working rule for growth worth funding. Subscription businesses reach the same figure from a different direction: with no purchase count to lean on, they divide the monthly contribution by the churn rate, since one divided by churn is the expected lifetime in months. Both routes answer the same question, and both are worthless without the margin in them.
Two levers move lifetime value: more purchases, or more margin
- Raise purchases per customer: email flows, subscriptions and loyalty programmes all work on the same arithmetic — a repeat order carries no new acquisition cost, so it lands almost entirely in profit.
- Raise gross profit per purchase: order value and margin multiply rather than add, so a gain in either moves lifetime value proportionally. Work the margin out first in the profit margin calculator.
Frequently asked questions
- How do you calculate customer lifetime value?
- There are two figures. Revenue CLV = average order value × purchases per customer. Profit CLV = average order value × (gross margin ÷ 100) × purchases per customer. Only the profit figure is usable for paid advertising. Example: $100 × 3 purchases = $300 revenue CLV; at a 50 % margin that is $150 profit CLV.
- What is the difference between CLV and LTV?
- In marketing they are the same metric — customer lifetime value, written either way. Be careful outside marketing: in lending, LTV means loan-to-value, the ratio of a loan to the value of the asset securing it. The two have nothing to do with each other.
- What is a good customer lifetime value?
- There is no absolute threshold, because the number depends entirely on what you sell. The rule that does travel is the ratio: profit CLV should be at least three times your customer acquisition cost for growth to be worth funding. In ecommerce a profit CLV of $80–300 is common.
- Is a higher CLV always better?
- Higher is generally better — it lets you pay more to acquire customers and grow faster. What matters is that you are reading the profit figure and not the revenue one, since only the margin is available to spend on advertising. A CLV that clears CAC by three times or more counts as healthy.