Customer lifetime value from three inputs — purchase value, frequency, and how long customers stay. Enter lifespan in years, or let the calculator derive it from your churn rate.
Customer Lifetime Value — written CLV or LTV — is the total value you expect from one customer over the entire time they stay with you. It answers the question every growth decision depends on: how much is a customer actually worth? Get it right and you know exactly how much you can afford to spend acquiring one. Get it wrong and you either overspend into bankruptcy or underspend and cede the market.
The classic formula multiplies three things:
CLV = average purchase value × purchase frequency per year × average customer lifespan (years).
A customer who spends $50 per order, buys four times a year, and stays three years is worth $50 × 4 × 3 = $600 in revenue.
Most subscription businesses don't know their average lifespan directly — but they do know their churn rate. The two are reciprocals:
Average lifespan = 1 ÷ churn rate.
A 20% annual churn means the average customer lasts 1 / 0.20 = 5 years. A 5% monthly churn means 1 / 0.05 = 20 months. Switch the lifespan method above to "churn rate" and the calculator converts it for you. Keep the period consistent: if churn is monthly, the lifespan comes out in months and you should convert purchase frequency to match.
The raw formula gives revenue CLV. For unit-economics decisions you want profit CLV — multiply by your gross margin. A $600 revenue CLV at a 70% margin is $420 of gross profit, and that $420 is what you actually compare against acquisition cost. Set the optional margin field below 100% to see profit CLV. Comparing revenue CLV against CAC is the single most common way founders convince themselves a broken funnel is healthy.
CLV is only meaningful next to customer acquisition cost. The benchmark is an LTV:CAC ratio of at least 3:1 — every dollar spent acquiring a customer should return at least three over their lifetime. Run your CAC in the CAC calculator and divide. If the ratio is under 3, the fix is usually on the CLV side, not the spend side.
Teams chronically underinvest here. Acquisition is visible and exciting; retention is quiet and unglamorous — but on the math, a point of retention is usually worth more than a point of new growth.
Mixing periods (monthly churn with annual purchase frequency) produces nonsense — keep units consistent. Using revenue instead of profit overstates what you can spend. And applying a single blended CLV across very different segments hides the truth: enterprise accounts and self-serve users often have CLVs an order of magnitude apart, and blending them can make you overspend on the cheap segment and underspend on the valuable one. Segment when the gap is large.
CLV = average purchase value × purchase frequency per year × average lifespan in years. Example: $50 × 4 × 3 = $600.
Average lifespan = 1 ÷ churn rate. 20% annual churn → 5 years; 5% monthly churn → 20 months.
Use profit (multiply by gross margin) when comparing against CAC. Revenue CLV overstates affordable acquisition spend.
One that gives an LTV:CAC ratio of at least 3:1. Price, frequency and retention are the levers that raise it.