Free tool · Planning
Customer lifetime value calculator
Work out what a customer is really worth over time, and how much you can afford to spend to win one.
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How to use the Customer Lifetime Value Calculator
How to use customer lifetime value
- Lifetime revenue = order value × orders per year × years.
- Lifetime profit = lifetime revenue × gross margin.
- LTV : CAC = lifetime profit ÷ cost to acquire a customer.
Knowing your CLV changes how you market: a dental practice or an HVAC company with service plans can afford to pay far more for a lead than a business with one-off sales. Use the number to set your marketing budget, judge ads with the ROAS calculator, and grow CLV with follow-ups and reviews through email and automation.
FAQ
Common questions
How do you calculate customer lifetime value?
Multiply the average order value by the number of orders per year and by the number of years a customer stays. That is lifetime revenue. Multiply it by your gross margin to get lifetime profit, which is the number to compare with marketing costs.
What is a good LTV to CAC ratio?
A common rule of thumb is a lifetime value at least 3 times the cost to acquire a customer (CAC). Below 1, you lose money on every new customer; far above 3, you may be under-investing in growth.
Should I use revenue or profit?
Use profit (revenue × gross margin) when deciding how much you can spend to win a customer. Revenue-based CLV makes marketing look cheaper than it really is.
What if I do not know how long customers stay?
Make a careful estimate from your records, for example how many customers from two years ago still buy. Start conservative and update it as you collect data.
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