Customer Lifetime Value Calculator

Estimate the total profit a typical customer generates over their lifetime.

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About this calculator

Customer lifetime value (CLV or LTV) estimates the total value a typical customer brings over their whole relationship with you. It reframes marketing decisions: a £60 acquisition cost looks expensive for a £45 order but cheap for a customer who orders four times a year for three years. Enter average order value, purchase frequency, customer lifespan and your gross margin — the margin turns a revenue-based LTV into the profit-based LTV you can compare against acquisition cost.

The formula

Lifetime revenue = Average order value × Purchases per year × Years CLV = Lifetime revenue × (Gross margin ÷ 100)

Worked example

Average order £45, 4 purchases a year, 3-year lifespan, 40% margin:

Lifetime revenue = £45 × 4 × 3 = £540
CLV = £540 × 0.40 = £216

Against a £66 CAC that is a ratio of 3.3 — healthy.

Common mistakes

Using revenue LTV (100% margin) and comparing it against a cost — always use profit LTV for CAC comparisons.
Guessing lifespan optimistically; churn data gives a truer number (lifespan ≈ 1 ÷ annual churn rate).
Treating all customers as average when a small segment often drives most of the value.

Frequently asked questions

If your annual churn is 33%, average lifespan is roughly 1 ÷ 0.33 = 3 years. Use your retention data rather than a hopeful guess.

A common benchmark is 3:1 or better. Below that, acquisition eats most of the value; far above it, you may be under-investing in growth.

For most small-business decisions the simple undiscounted figure is fine. For multi-year financial modelling, applying a discount rate is more rigorous.

Assumptions & limitations

Assumes constant order value, frequency and margin over the customer's life, with no discounting of future cash flows.

Sources & verification

This calculator applies the standard formula published above to the figures you enter — it relies on no external statutory data. The formula and the worked example were checked by hand against each other.

Formula last verified: 24 July 2026

Maintained by: Steve Davis, Founder & Editor — see our editorial standards

Spotted an error or an out-of-date figure? Report it — corrections are prioritised over all other work (see our corrections policy).