CLV Calculator: Customer Lifetime Value
Work out what a customer is worth over the whole time they buy from you. Type your average ticket, how often a customer buys in a year, your gross margin and how long customers stay. You get the simple CLV in sales next to the CLV with margin, and the most you can spend to win a customer before the customer costs more than they leave.
- Free
- No sign-up
- Runs in your browser
Result
Type the ticket, the purchases per year, the margin and how long a customer stays to see the CLV.
Amounts are rounded to the cent and future sales are not discounted. It is arithmetic on your own numbers, not financial advice.
How the CLV is worked out
Simple CLV: what the customer spends
Average ticket × purchases per year gives the sales one customer brings in a year. Multiply by the years the customer stays and you have the simple CLV. It is a sales figure: it does not say how much of that money is yours.
CLV with margin: what the customer leaves
Part of every sale pays for what you sold. CLV with margin = simple CLV × gross margin. This is the figure to compare with any cost, because it is the money actually left.
Lifetime from a churn rate
If you know the share of customers who leave each year better than how long they stay, the lifetime is 1 ÷ yearly churn. A 25% churn is 1 ÷ 0.25 = 4 years. It assumes the churn stays the same every year.
The CAC ceiling
CAC is what you spend to win one customer. When the CAC equals the CLV with margin, the customer pays back the acquisition and nothing else, so that amount is the ceiling. Anything you want left for rent, salaries and profit has to come from staying below it.
Your CAC against the CLV
With your CAC typed, the calculator shows how many times the CLV with margin covers it, what is left per customer, and the payback: CAC ÷ margin per month, the months a customer takes to return what they cost.
What this leaves out
Future sales are not discounted to present value, so long lifetimes look better than they are. Fixed costs, a ticket that grows or shrinks over time and the customers that a happy customer brings are not in the sum either.
Formulas
- Simple CLV
- average ticket × purchases per year × years as a customer
- CLV with margin
- simple CLV × gross margin
- Lifetime from churn
- 1 ÷ yearly churn
- CAC ceiling
- CLV with margin
- CAC for a target ratio
- CLV with margin ÷ target ratio
- CLV to CAC
- CLV with margin ÷ CAC
- CAC payback, in months
- CAC ÷ (average ticket × purchases per year × gross margin ÷ 12)
You know what a customer is worth. Now win the next one
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Create your free accountSee VISU AdsHow to use it
- Type your average ticket and how many times a customer buys in a year.
- Type your gross margin: the share of each sale left after the cost of what you sold.
- Say how long a customer stays: type the years, or switch to churn and type the percent of customers you lose in a year.
- Read the simple CLV, the CLV with margin and the CAC ceiling. Add your CAC or your own target ratio to see the payback and what is left per customer.
Examples
A hair salon client
Made-up numbers to show the maths: an average ticket of $35.00, 8 visits a year and a client who stays 3 years. Simple CLV = 35 × 8 × 3 = $840.00 in sales. With a 60% gross margin, the CLV with margin is $504.00, which is also the most the salon can pay to win that client without losing money.
The same client from a churn rate
If the salon knows that 25% of its clients leave each year, the lifetime is 1 ÷ 0.25 = 4 years: a simple CLV of $1,120.00 and a CLV with margin of $672.00.
Checking a CAC against it
Back to 3 years. If winning the client costs $90.00, the CLV with margin is 5.6 times the CAC, the $168.00 of margin a year pays the CAC back in 6.4 months and $414.00 is left per client. With a target of 4 to 1 of its own, the salon could pay up to $126.00.
Questions
How do you calculate customer lifetime value?
Multiply the average ticket by the purchases per year and by the years a customer stays. That is the simple CLV, in sales. Multiply it by your gross margin to get what the customer really leaves. With a ticket of 35, 8 purchases a year, 3 years and a 60% margin: 35 × 8 × 3 = 840, and 840 × 0.6 = 504.
Should I use the simple CLV or the CLV with margin?
Use the CLV with margin whenever you compare it with a cost, such as advertising. The simple CLV counts money that goes straight to suppliers, so comparing it with your CAC makes every campaign look better than it is.
What is the CAC ceiling?
The acquisition cost at which a customer only pays back what it cost to win them. It equals the CLV with margin. Above it each new customer loses money. Below it, the difference is what is left for fixed costs and profit.
What is a good CLV to CAC ratio?
There is no number that fits every business. A ratio of 1 means the customer returns the acquisition cost and nothing more, so you need to be above it by enough to pay your fixed costs and to wait out the payback period. Compare the ratio with your own past months and between your own channels, and type your target in the calculator to see the CAC it allows.
How do I know how long a customer stays?
From your own records: the time between the first and the last purchase of customers who already left. If you measure churn instead, lifetime = 1 ÷ yearly churn, so a 25% churn is 4 years.
Is CLV the same as LTV?
Yes. CLV, CLTV and LTV are names for customer lifetime value. In lending, LTV also means loan-to-value, which is a different calculation.
Does the calculator discount future sales?
No. A sale three years from now counts the same as a sale today. For short lifetimes the difference is small. For long ones the real value is lower than the figure shown.
Are my numbers stored?
No. The maths runs in your browser. Your ticket, margin and CAC are not uploaded, are not added to the page address and are not saved.