Estimate customer lifetime value (LTV) from average order value, purchase frequency, and retention/churn. The tool computes gross LTV, contribution LTV after COGS, and compares LTV to CAC to guide budget and payback windows. Includes cohort‑based considerations, discounting, and pitfalls like overstating retention from short windows.
Customer Lifetime Value Calculator
Calculate CLV to understand the total value of your customer relationships. Compare CLV to CAC for profitability insights.
💰Revenue Metrics
🎯Acquisition Metrics
📊 Industry Benchmarks
Customer Lifetime Value
✅ Excellent! Your CLV:CAC ratio of 4.7x indicates healthy unit economics.
Value Components
Key Metrics
Retention Rate
95%
Annual Revenue
$600
Total Profit
$700
Total Revenue
$1,000
Understanding Customer Lifetime Value
Customer Lifetime Value (CLV or LTV) represents the total revenue you can expect from a single customer throughout their entire relationship with your business. It's a critical metric for understanding unit economics, determining marketing budgets, and making strategic business decisions.
CLV Calculation Methods
Simple CLV Formula
CLV = ARPU × Gross Margin × Customer Lifetime
Best for: Quick estimates, stable businesses
Advanced CLV Formula
CLV = Σ (Revenue × Retention × Discount) for each period
Best for: Financial planning, investor presentations
Key CLV Drivers
- Average Revenue Per User (ARPU): Monthly or annual revenue per customer
- Customer Lifetime: Average duration of customer relationship (1 ÷ churn rate)
- Gross Margin: Profit margin after direct costs
- Retention Rate: Percentage of customers who continue using your product
- Churn Rate: Percentage of customers who stop using your product
CLV:CAC Ratio Guidelines
Poor (<1x)
Losing money on each customer. Unsustainable business model.
Acceptable (1-3x)
Breaking even or small profit. Need to optimize for growth.
Excellent (>3x)
Healthy unit economics. Ready to scale acquisition.
Strategies to Increase CLV
- Improve Onboarding: Better first experience reduces early churn
- Add Value: Continuously improve product to justify price
- Upsell & Cross-sell: Increase revenue from existing customers
- Build Habits: Create sticky features that drive daily usage
- Provide Excellence Support: Happy customers stay longer
- Implement Loyalty Programs: Reward long-term customers
- Optimize Pricing: Find the sweet spot between value and revenue
Important: CLV calculations are estimates based on historical data and assumptions. Regular monitoring and adjustment of your CLV model ensures accuracy. Consider factors like seasonality, market changes, and product evolution when interpreting CLV metrics.
Frequently Asked Questions
Which LTV model should I use?
For early stage, use simple AOV × frequency × margin × lifespan.
Mature teams can use cohort or probabilistic models (BG/NBD) for accuracy.
How does churn impact LTV?
Small churn increases compound over time.
Moving monthly churn from 6% to 4% can increase LTV by 30%+ depending on margin.
LTV:CAC ratio best practice?
A common rule is 3:1 at steady state.
If under 2:1, reduce CAC or improve retention; if over 5:1, consider scaling spend.
Should I discount future cash flows?
Yes for long horizons.
Use a 8–12% annual discount rate or your weighted average cost of capital to get present‑value LTV.
Do refunds and returns matter?
Yes—subtract returns and refunds from revenue and adjust margin to avoid overstating LTV.
What’s a healthy payback period?
Consumer: <3 months is strong; B2B: <12 months typical.
Longer payback relies on low churn and strong financing capacity.
About This Page
Editorial & Updates
- Author: SuperCalc Editorial Team
- Reviewed: SuperCalc Editors (clarity & accuracy)
- Last updated: 2026-01-13
We maintain this page to improve clarity, accuracy, and usability. If you see an issue, please contact hello@supercalc.dev.
Financial/Tax Disclaimer
This tool does not provide financial, investment, or tax advice. Calculations are estimates and may not reflect your specific situation. Consider consulting a licensed professional before making decisions.