Work out how much a customer is really worth over their whole relationship with you, then check that number against what you spend to acquire one.
Work out how much a customer is really worth over their whole relationship with you, then check that number against what you spend to acquire one.
Average order value and how often a customer buys in a year.
Customer lifespan in years, or a churn rate if that is easier to find.
Add what it costs to win a customer and see your LTV to CAC ratio.
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A high CLV means very little on its own. It only becomes a decision-making number once you compare it to what you spend to win that customer in the first place.
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Nothing saved yet. Run a calculation and press Save to keep it here, then tick any two to compare them side by side.
Currency for your entered figures defaults to USD and can be changed above with no conversion applied to what you type. Live conversion, when turned on, uses real exchange rates and is shown as an approximate reference, not a guaranteed rate. Rates by ExchangeRate-API, updated once daily. This model assumes steady average behaviour and does not account for discounting future revenue to present value.
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Customer lifetime value, also called CLV, CLTV or LTV, is the total revenue or profit you can expect from one customer over the whole time they buy from you. It is the number that tells you how much you can afford to spend to win a customer.
The free CLV calculator above uses average order value, purchase frequency and customer lifespan (or churn rate, if that is easier to find). Add your acquisition cost and it returns the LTV to CAC ratio, the best single check on whether your growth is profitable.
Businesses that know their CLV can outbid competitors who only look at first-order profit, because they know what a customer is really worth.
CLV = average order value × purchases per year × customer lifespan in years. A customer spending $60, five times a year, for three years is worth $900. If lifespan is unknown, use 1 ÷ annual churn rate.
Use averages from the last 12 months of sales data. Rough numbers still give a useful answer.
Average order value and how often a typical customer buys in a year.
Average lifespan in years, or switch to churn rate if you track cancellations.
What you spend in sales and marketing to win one new customer.
An LTV to CAC ratio around 3:1 or higher is widely treated as healthy.
The simple model below works for most small and mid-sized businesses. Multiply by gross margin for a profit-based CLV.
CLV = AOV x Purchases per year x Lifespan (years)Lifespan = 1 / Annual churn rateLTV:CAC = CLV / Customer acquisition costRevenue CLV is easier to explain. Profit CLV, multiplied by gross margin, is safer for deciding how much to spend on acquisition.
A coffee subscription business checks its unit economics.
The ratio compares what a customer brings in with what it cost to win them.
| LTV:CAC ratio | What it usually means | Typical action |
|---|---|---|
| Below 1:1 | You lose money on every customer | Cut acquisition spend, fix pricing or retention |
| 1:1 to 2:1 | Thin or no profit after other costs | Improve retention and average order value |
| Around 3:1 | Widely treated as healthy | Scale steadily |
| 5:1 or above | Very efficient, possibly under-investing | Test higher acquisition budgets |
Also check payback period: how many months it takes to earn back CAC. Under 12 months is comfortable for most businesses.
CLV has three levers: spend per order, how often people buy and how long they stay.
Multiply average order value by purchases per year and by average customer lifespan in years. For example, $50 x 4 x 3 = $600.
Around 3:1 is widely treated as healthy. Below 1:1 means you lose money on each customer. Well above 5:1 may mean you are under-spending on growth.
Use churn. Lifespan equals 1 divided by annual churn rate, so 25% annual churn means an average lifespan of four years.
Yes. CLV, CLTV and LTV all describe customer lifetime value. Some teams use LTV for revenue and CLV for profit, so check which one a report uses.
Use profit, meaning revenue times gross margin, when deciding how much to spend on acquisition. Revenue CLV overstates what you can afford.
Quarterly is enough for most businesses, or after a pricing change, a new product line or a shift in retention.
We build acquisition and retention campaigns around your real unit economics, so every dollar of spend has a clear payback. Explore our social media marketing services.