Business calculators
Customer Lifetime Value Calculator
Estimate customer revenue from purchase value, frequency, and lifespan. Your inputs stay in this browser.
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What this calculator measures
This CLV model estimates how much revenue one customer represents if they keep buying at the size and pace you enter. It is useful when you are deciding whether a channel's CAC is sane, or whether a discount that shrinks the first order still pays if people stay.
The metric is misleading when lifespan is a wish. Three years of $75 orders four times a year is $900 of revenue CLV — and it is fiction if median tenure is seven months. It is also misleading as a profit number. The formula does not subtract cost of goods, shipping, refunds, or support, and it does not discount next year's boxes. Comparing $900 of revenue CLV with a $150 fully loaded CAC is an apples-to-oranges ratio that almost always flatters acquisition.
The common manual mistake is to multiply average order value by a tenure you borrowed from a blog (or from your best customers) and then treat the product as cash. Mix a wholesale account that orders monthly with a one-time gift buyer and the average purchase frequency becomes a number no real person matches.
Ibrahim's candle shop sees a typical first order of $48. Customers who stay buy 3.2 times a year. Observed average lifespan in the last two cohorts is 1.4 years, not the 4 years he used in a pitch deck. Revenue CLV is $48 × 3.2 × 1.4 ≈ $215. Contribution after wax, shipping, and fees is about 38% of revenue, so contribution CLV is about $82. A $70 Facebook CAC is then a maybe. A $70 CAC against the old $768 story ($48 × 4 × 4) was a story.
Formula
Inputs and variables
- Average purchase value
- Enter the money amount used by this formula.
- Purchases per year
- Enter the value used by this formula.
- Customer lifespan in years
- Enter the value used by this formula.
How to use the calculator
- Choose a display currency when money fields are present.
- Enter values that cover the same period, scope, and currency.
- Review the result, formula, and worked example before using the estimate in a decision.
- Change one assumption at a time to understand what drives the result.
Worked example
- 1Ibrahim's typical order is $48, 3.2 times a year, for 1.4 observed years.
- 2$48 x 3.2 x 1.4 ≈ $215 of estimated lifetime revenue.
- 3At a 38% contribution margin, contribution CLV is about $82 — the figure to set next to CAC.
How to interpret the result
Treat the result as a planning estimate for the segment whose averages you typed. Revenue CLV is not profit. If you need a ratio against CAC, haircut CLV by contribution margin or enter a purchase value that is already contribution. Use cohort history; do not use the tenure of your favorite customer.
Common mistakes and limits
- Using a lifespan you have never observed for this offer or price point.
- Averaging wholesale and retail customers into one frequency.
- Comparing revenue CLV with fully loaded CAC without a margin haircut.
- Treating the estimate as a forecast that already includes churn by week.
Frequently asked questions
Is lifetime value the same as last year's revenue per customer?
Not necessarily. Last year's revenue per customer mixes brand-new buyers with people who have been around for years. This calculator asks for an average purchase, a yearly frequency, and a lifespan — preferably from one acquisition cohort — so you are not flattering new-customer economics with old loyalists.
Should I compare CLV to CAC using revenue or profit?
Use the same economic unit on both sides. Fully loaded CAC is a cost. Revenue CLV is not a cost offset. Haircut CLV by gross margin or contribution, or enter a purchase value that is already contribution, before you quote an LTV:CAC ratio.
What customer lifespan should I enter if I am pre-revenue?
You do not have an observed lifespan yet. Use a conservative analog from a similar price and delivery model, and treat the result as a hypothesis. Recalculate as soon as a cohort is 6–12 months old. A four-year lifespan in a pitch is not evidence.
Why is my CLV high when most customers buy only once?
The frequency or lifespan input is probably taken from the minority who subscribe, not from the median buyer. Recalculate on one-time buyers alone (frequency near 1, lifespan of one purchase) and on subscribers alone. A blended CLV will tell you to overspend on the tourists.
Does this CLV include refunds and discounts?
Only if you put a lower average purchase value in. The formula multiplies the three inputs you type. If 10% of orders refund, reduce purchase value (or frequency) to match collected revenue, or the lifetime figure will describe invoices, not cash.