CLV (Customer Lifetime Value) measures how valuable a customer is to your business over time. A higher CLV usually indicates stronger profitability, better customer retention, and more sustainable long-term growth.

How to use this CLV calculator

Enter your average sales price, cost per sale, lifetime number of purchases, and customer acquisition cost. The calculator will estimate how much revenue a single customer generates over their entire relationship with your business.

CLV Formula

[ CLV = (Average\ Sales\ Price - Cost\ per\ Sale) \times Lifetime\ Number\ of\ Sales - Customer\ Acquisition\ Cost ]

What is a good Customer Lifetime Value?

  • Depends on your business model: Subscription and SaaS companies typically aim for higher CLV due to recurring revenue.
  • CLV vs CAC ratio: A healthy benchmark is a CLV that is at least three times higher than your CAC.
  • Industry benchmarks: E-commerce CLV is often lower but driven by repeat purchases, while B2B CLV is usually higher due to long-term contracts.

Why Customer Lifetime Value matters

  • Helps determine how much you can spend on customer acquisition
  • Guides pricing, retention, and upselling strategies
  • Improves long-term revenue forecasting
  • Identifies your most valuable customer segments

Frequently Asked Questions

What is Customer Lifetime Value (CLV)?

Customer Lifetime Value (CLV) is the total net profit a business expects to generate from a customer over the entire duration of the relationship. It helps companies understand how valuable each customer is in the long term.

How do you calculate Customer Lifetime Value?

CLV is calculated by subtracting the cost per sale from the average sales price, multiplying the result by the total number of purchases a customer makes, and then subtracting the customer acquisition cost (CAC).

Why is Customer Lifetime Value important for businesses?

CLV is important because it helps businesses determine how much they can afford to spend on acquiring customers, identify high-value customer segments, improve retention strategies, and forecast long-term revenue more accurately.

What is a good CLV to CAC ratio?

A commonly accepted benchmark is a CLV to CAC ratio of at least 3:1. This means the revenue generated from a customer should be at least three times higher than the cost of acquiring them.

How can I increase my Customer Lifetime Value?

You can increase CLV by improving customer retention, increasing average order value, offering upsells or subscriptions, enhancing customer experience, and reducing churn.

Is CLV the same for every customer?

No, CLV varies depending on customer behavior, acquisition channel, purchase frequency, and customer segment. Segmenting customers allows businesses to focus on the most profitable groups.