Customer Lifetime Value Calculator

Calculate CLV from purchase value, frequency, lifespan, and margin. See LTV:CAC ratio.

By Konstantin Iakovlev · Updated April 2026 · Source: SBA — Business Guide

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Lifetime Value (Revenue)

$600.00

LTV (Profit)

$180.00

LTV Breakdown

Annual Customer Value$200.00
Lifetime Value (Revenue)$600.00
Lifetime Value (Profit)$180.00
+1% Retention Impact+1.0% more LTV

Use the Customer Lifetime Value Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

How much a customer is worth across the entire relationship shapes nearly every spending decision a business makes. That figure carries extra weight in 2026, with customer acquisition costs projected to climb 8-10% across many industries. Companies that manage toward lifetime value tend to protect their margins and steer marketing budgets with a steadier hand as competition intensifies.

The estimate here rests on a simplified predictive formula: CLV equals average purchase value times average purchase frequency, multiplied by customer lifespan and gross margin. Alongside it sits the LTV:CAC ratio, found by dividing CLV by customer acquisition cost. That ratio is one of the cleaner gauges of whether your marketing spend is earning its keep.

Feed the model realistic averages drawn from your actual book of business rather than your standout accounts. Overstating customer lifespan or gross margin is the usual way people end up with a CLV that looks impressive and means little. Treat the output as a forecast, since real outcomes shift with the market and with how customers actually behave.

Example: E-commerce Subscription Box Service

  1. 1 Let's say a subscription box company has an average subscription value of $50, customers purchase monthly (12 times a year), the average customer stays for 3 years, and the gross margin on each box is 40%. Their Customer Acquisition Cost (CAC) is $75.
  2. 2 First, calculate the average annual value: $50 (purchase value) x 12 (frequency) = $600. Then, the total revenue over lifespan: $600 (annual value) x 3 (lifespan) = $1,800. Next, apply the gross margin: $1,800 x 0.40 (gross margin) = $720 CLV. Finally, the LTV:CAC ratio is $720 / $75 = 9.6:1.
  3. 3 The calculated Customer Lifetime Value (CLV) for this business is $720. The LTV:CAC ratio is 9.6:1.
  4. 4 A CLV of $720 indicates that, on average, each customer is worth $720 in profit to the business over their lifetime. An LTV:CAC ratio of 9.6:1 is excellent, suggesting that for every dollar spent on acquiring a customer, the company earns $9.60 in lifetime value, indicating highly efficient marketing and a sustainable business model.

Source: SBA — Business Guide · Last updated: April 2026

Frequently Asked Questions

How do I calculate customer lifetime value?
Simple CLV = Average purchase value x Purchase frequency x Average customer lifespan. If a customer spends $50 per order, orders 4 times per year, and stays for 5 years, CLV = $50 x 4 x 5 = $1,000. For more accuracy, apply your gross margin and discount future revenue.
What LTV to CAC ratio indicates a healthy business?
A healthy LTV:CAC ratio is 3:1 or higher, meaning each customer generates at least 3x what it costs to acquire them. Below 1:1, you are losing money on each customer. Between 1:1 and 3:1, your business model may not be sustainable long-term. Above 5:1 may mean you are under-investing in growth.
How do I increase customer lifetime value?
Improve retention (reduce churn), increase purchase frequency (email marketing, loyalty programs), increase average order value (upsells, bundles, premium tiers), and extend customer lifespan (engagement, community, excellent support). Even a 5% improvement in retention can increase CLV by 25-95%.

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