♾️ Customer Lifetime Value Calculator
Calculate CLV from average purchase value, purchase frequency, and customer lifespan.
Why Customer Lifetime Value Matters
CLV tells you the maximum you can profitably spend to acquire a customer. CLV = Avg Purchase Value × Purchase Frequency × Customer Lifespan. Use profit-based CLV (multiply by gross margin) for accurate comparison against CAC. The LTV:CAC ratio is the master metric — target 3:1 or higher for a sustainable business.
How to Increase Customer LTV
Three levers: (1) Increase average order value through upselling, bundling, or premium tiers. (2) Increase purchase frequency through loyalty programs, email marketing, and product improvement. (3) Extend customer lifespan through better onboarding, customer success, and reduced churn. Improving retention by just 5% typically increases CLV by 25–95%.
People Also Ask
3:1 is the widely cited benchmark — customers should generate 3× what they cost to acquire. Below 1:1 is unsustainable. Above 5:1 may mean you're underinvesting in growth. The payback period (CAC ÷ Monthly Profit per Customer) should ideally be under 12 months for SaaS, under 6 months for eCommerce.
Average Customer Lifetime = 1 ÷ Monthly Churn Rate. At 2% monthly churn: 1 ÷ 0.02 = 50 months (4.2 years). At 5%: 1 ÷ 0.05 = 20 months (1.7 years). Reducing churn directly extends lifetime and multiplies CLV.