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Customer Lifetime Value (CLV) estimates the total revenue a typical customer generates over their entire relationship with your business — the natural counterpart to customer acquisition cost (CAC) when judging whether growth spending makes sense.
This calculator uses the standard historic CLV formula: average purchase value multiplied by purchase frequency and customer lifespan.
How it works
Enter the average value of a purchase, how often a typical customer buys per year, and how many years a customer typically stays. The tool multiplies these together to estimate total lifetime value.
- Enter average purchase value.
- Enter purchases per customer per year.
- Enter average customer lifespan (years).
- Click Calculate to see your results.
Examples
CLV for a subscription-style customer
A $75 average purchase, bought 4 times a year, over a 3-year average customer lifespan, gives an estimated CLV of $900.
Who should use it
- Checking whether marketing and sales spend is sustainable relative to customer value.
- Setting a maximum acceptable CAC based on known CLV.
Industry applications
- Marketing and growth
- SaaS and subscription businesses
Advantages
- Simple, widely-used formula requiring only three inputs.
- Gives a clear, single number for comparing against acquisition cost.
Limitations
- Uses a historic average model, not a predictive or cohort-based one.
- Doesn't account for profit margin — this is revenue, not profit, unless you adjust it yourself.
Common mistakes to avoid
- Using an overly optimistic customer lifespan estimate without historical churn data to support it.
- Comparing revenue-based CLV directly against costs without adjusting for profit margin.
Best practices
- Cross-check this result against your CAC — CLV should comfortably exceed CAC for sustainable growth spending.
Tips
- If you have segment-level data (by acquisition channel or customer type), calculate CLV per segment — a single blended average can obscure your most and least valuable customer groups.