Free Customer Lifetime Value (CLV) Calculator
How to Calculate Customer Lifetime Value (CLV)
Customer Lifetime Value (CLV) shows how much profit a single customer brings to your business over time. Knowing this number helps you understand how valuable your customer relationships are, measure marketing performance, and forecast long-term revenue.
The standard Customer Lifetime Value formula is:
CLV = Average Purchase Value × Purchase Frequency × Customer Lifespan × Gross Margin
If you want to include acquisition costs, use this version instead:
Net CLV = (Average Purchase Value × Purchase Frequency × Customer Lifespan × Gross Margin) – Customer Acquisition Cost
Let’s look at a few simple CLV examples:
- E-commerce store: Customers spend $100 per order, buy 4 times a year, and stay for 2 years with a 50% margin → CLV = $400
- Software company (SaaS): A $50 monthly plan, 24-month average stay, and 70% margin → CLV = $840
- Consulting agency: A $1,000 monthly retainer for 12 months with a 60% margin → CLV = $7,200
- Gym or fitness studio: A $60 monthly membership, 18-month average stay, and 80% margin → CLV = $864
Each business has a different CLV because purchase frequency, customer loyalty, and profit margins vary. Tracking this number helps you identify your most valuable customers and see how sustainable your business growth truly is.
Understanding the CLV-to-CAC Ratio
The CLV-to-CAC ratio shows how much value each customer brings compared to how much it costs to acquire them. It’s one of the simplest ways to gauge if your customer relationships are truly profitable.
- Below 1:1 — Poor: You’re spending more to acquire customers than they’re worth. Revisit your pricing, retention, or marketing strategy.
- 1:1 to 2.9:1 — Fair: You’re breaking even or earning a small profit, but there’s room to improve efficiency and retention.
- 3:1 to 4.9:1 — Good: A healthy balance — you’re earning about three to five times more than your acquisition costs.
- 5:1 to 7.9:1 — Excellent: Your marketing and retention are highly efficient. You could consider investing more in growth.
- 8:1 and above — Exceptional: Outstanding performance! You might be underinvesting in customer acquisition and could scale up safely.
Adding this ratio to your analysis gives you a clear view of how efficiently your business converts marketing spend into long-term customer value.
Customer Lifetime Value, or CLV, is the total profit your business gets from one customer during the whole time they buy from you. It shows how valuable each customer is over their full relationship with your business, not just from one purchase.
The basic formula is:
CLV = (Average Purchase Value × Purchase Frequency × Customer Lifespan × Gross Margin) – CAC.
If you know how much customers spend, how often they buy, how long they stay with your business, and how much profit you make on each sale, you can easily calculate your CLV.
A high CLV means your customers often buy, stay longer, or give you good profit margins. This shows that your business is healthy.
A low CLV means your marketing or customer acquisition costs are high, or your customers stop buying too soon.
A balanced CLV means your profit and acquisition costs work well together and bring steady long-term income.
There is no one perfect CLV number. It depends on your prices, your type of customers, and your industry.
- SaaS or software company: A customer pays $50 each month for 24 months with a 70% margin. The CLV is $840.
- E-commerce store: A buyer spends $33.33 per month for 24 months with a 50% margin. The CLV is $400.
- Consulting agency: A client pays $1,000 per month for 12 months with a 60% margin. The CLV is $7,200.
- Fitness studio: A member pays $60 per month for 18 months with an 80% margin. The CLV is $864.
These examples show that CLV can be very different for each type of business. It depends on how often people buy, how long they stay, and how much profit you make from each sale.
This calculator helps you find your CLV, but Flowlu helps you manage your customers every day. You can track sales, invoices, and customer activity all in one place. Flowlu helps you see which customers bring the most value and where your best growth comes from.