Estimate what an average customer is worth to your business over time.
Enter the purchase value, purchase frequency and customer lifespan.
Formula: Avg Purchase Value × Purchases per Year × Lifespan (Years) × Profit Margin. All amounts in $.
Customer Lifetime Value (CLV or LTV) estimates the total value an average customer brings to your business over the whole time they keep buying from you. A CLV Calculator turns a few figures from your sales data into one number, which helps you think about long-term profit instead of only the next sale.
CLV is often compared with customer acquisition cost (CAC) to judge how much it is sensible to spend on winning customers, and it can help you see which customer groups are most valuable. It is an estimate built on averages and assumptions, so treat it as a planning aid rather than a guarantee.
This calculator uses four inputs from your sales data:
Total revenue in a period divided by the number of purchases in that period, which gives the average amount spent per order. Use revenue excluding any sales tax you collect for the government.
How many times an average customer buys in a year: the number of purchases divided by the number of unique customers over the same year. A subscription, for example, has a high and regular frequency.
How many years a customer keeps buying before they stop (churn). Lifespan varies widely between businesses, so base it on your own data wherever you can.
The share of each sale you keep after the direct costs of serving the customer, such as product cost, delivery and payment fees. This is usually the gross (contribution) margin. Revenue alone does not show what a customer is worth to your bottom line. If you prefer a revenue-based CLV, set this field to 100%.
Multiplying the average purchase value by the purchase frequency gives the annual revenue per customer, which is shown as a second result.
CLV = Average Purchase Value × Purchases per Year × Lifespan (Years) × Profit Margin
With a profit margin below 100%, the result is a profit-based CLV. This is a simple model: it assumes your purchase value, frequency and margin stay constant, and it does not discount future years or subtract acquisition costs.
| Avg. Value | Purchases / Year | Lifespan | Margin | Annual Revenue | CLV |
|---|---|---|---|---|---|
| $50 | 12 | 3 years | 100% | $600 | $1,800 |
| $200 | 4 | 5 years | 70% | $800 | $2,800 |
| $20 | 24 | 2 years | 100% | $480 | $960 |
| $35.50 | 6 | 4 years | 45% | $213 | $383.4 |
Calculated with this calculator's formula.
CLV rises if customers spend more per order, buy more often, stay longer, or if your margin improves. Common areas to review, with results depending on your business:
The same idea applies in different forms. Subscription businesses often work from monthly recurring revenue and churn. Online shops look at repeat order value. Service businesses such as salons or consultants can use CLV to see which clients are worth the most over time. Whatever the model, keep purchase frequency and lifespan in the same time unit (years in this calculator).
A revenue-based figure can overstate what a customer is worth to your bottom line. Enter your real margin for a profit-based CLV.
Guessing a long lifespan without data inflates CLV. Where you can, base it on your churn rate. A simple approximation is lifespan ≈ 1 ÷ annual churn rate, which assumes the churn rate stays constant.
Purchase frequency must be per year when lifespan is in years. Mixing months and years gives a meaningless result.
Sales tax collected on behalf of the government is not your revenue, so leave it out of the average purchase value.
Customer lifetime value helps you weigh how much to invest in winning and keeping customers. Use the calculator with your own sales data, choose a realistic margin and lifespan, and compare the result with your CAC to see whether your growth looks sustainable.