Customer Lifetime Value Calculator
What a customer is really worth.
Calculate customer lifetime value from purchase metrics and retention. Enter purchase value and purchase frequency for an instant result.
What this tool does
This tool calculates customer lifetime value from purchase value, frequency, lifespan, and gross margin.
Enter Values
Formula Used
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Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
Customer Lifetime Value (LTV/CLV) = total profit from a customer over their lifespan with you. Foundation metric for pricing CAC, retention investment, and business valuation.
80 average purchase × 4 purchases/year × 5 years × 70% gross margin = 1,120 LTV. Against 200 CAC that's 5.6x ratio - strong. Use to justify acquisition spend.
Higher LTV justifies higher CAC and more retention investment. Even 20% LTV improvement (longer retention or bigger purchases) transforms unit economics.
Run it with sensible defaults
Using average purchase value of 80, annual purchase frequency of 4, customer lifespan of 5, gross margin of 70%, the calculation works out to 1,120.00. Nudge the inputs toward your own situation and the output recalculates instantly. The defaults are meant as a starting point, not a recommendation.
The levers in this calculation
The inputs — Average Purchase Value, Annual Purchase Frequency, Customer Lifespan, and Gross Margin % — do not pull with equal force. Frequency and unit price pull the total in different directions. The biggest surprise for most people is how small recurring amounts compound into large annual figures — that's where this calculation earns its keep.
How the math works
Annual revenue = value × frequency. Lifetime revenue = annual × lifespan. LTV = lifetime × margin. The working is transparent — you can verify every step yourself in the formula section below. No black box, no opaque "proprietary model".
What the score tells you
Headline financial numbers — income, savings, debt — each tell part of the story. This calculation stitches several together into a single read you can track over time. The value is in the direction, not the absolute number.
What this doesn't capture
The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.
£80 £ × 4/yr × 5 yearsyrs × 70% = $1,120.00.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
Annual revenue = value × frequency. Lifetime revenue = annual × lifespan. LTV = lifetime × margin.
References
Frequently Asked Questions
How to extend lifespan?
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