Customer Lifetime Value Calculator
Customer lifetime value (CLV) measures the total profit a customer generates over their relationship with your business. This calculator uses average order value, purchase frequency, gross margin percentage, and annual churn rate to compute CLV. Optionally enter your customer acquisition cost (CAC) to see the LTV:CAC ratio and payback period in months. Both methods (frequency-based and churn-rate-based) are shown side by side so you can compare.
CLV formula
Annual revenue per customer = AOV x Orders per year
Customer lifespan = 1 / Annual churn rate
CLV = Annual revenue x Gross margin x Customer lifespan
LTV:CAC = CLV / CAC
Payback months = CAC / (Annual revenue x Gross margin / 12)
What is a healthy CLV?
There is no universal threshold since CLV depends on the industry and cost structure. The most actionable metric is the LTV:CAC ratio. A ratio above 3:1 typically signals a sustainable acquisition model. SaaS businesses often target 5:1 or higher. A ratio below 1:1 means the business is acquiring unprofitable customers.
CLV calculator: frequently asked questions
What is customer lifetime value?
Customer lifetime value (CLV or LTV) is the total net profit a business expects to earn from a customer over the entire duration of their relationship. It is used to guide acquisition spending, retention investment, and segmentation decisions.
What is the CLV formula?
CLV = (Average order value x Purchase frequency x Gross margin) / Churn rate. Alternatively: CLV = Average order value x Orders per year x Customer lifespan in years x Gross margin.
What is churn rate in CLV?
Annual churn rate is the percentage of customers who stop buying each year. A 25% annual churn means the average customer stays for 4 years (1 / 0.25). Lower churn produces a dramatically higher CLV.
What is LTV:CAC ratio?
LTV:CAC compares customer lifetime value to customer acquisition cost. A ratio above 3:1 is generally considered healthy for a SaaS or subscription business. Below 1:1 means you spend more to acquire a customer than they return.
How do I improve CLV?
Raise average order value with upsells, increase purchase frequency with loyalty programs, improve gross margin through operational efficiency, and reduce churn with better onboarding and support.
Official sources
- U.S. Small Business Administration: Managing business finances.
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.