Customer Lifetime Value Calculator
Estimate revenue CLV, contribution after service costs, net CLV after acquisition cost, LTV:CAC and CAC payback.
Customer lifetime value formulas
The simple revenue model multiplies average order value, annual purchase frequency and average customer lifespan. This calculator then applies gross margin, recurring service cost, acquisition cost and an optional discount rate so revenue, contribution and net value are not confused.
Contribution CLV = revenue CLV × gross margin − annual cost to serve × lifespan
Net CLV = contribution CLV − customer acquisition cost
LTV:CAC = contribution CLV before acquisition ÷ customer acquisition cost
When totals are selected, average order value equals period revenue divided by orders, and purchase frequency equals orders divided by unique customers. Use one consistent annual period for revenue, orders and customers.
Checked example
An average order of $75, four purchases per year and a three-year lifespan produce $900 of lifetime revenue. At a 60% gross margin, gross profit is $540. Subtracting $90 of service costs and $100 of acquisition cost gives net CLV of $350 and an LTV:CAC ratio of 4.50. Discounting each period’s contribution at 8% gives discounted net CLV of approximately $286.56.
How the discounted result works
The undiscounted results assume the entered averages remain constant. The discounted result treats contribution as arriving at the end of each year, discounts it to today and subtracts CAC once at the start. If lifespan includes a partial final year, revenue and service cost are prorated and discounted to that partial period end.
Important limits
This is a deterministic average-customer model, not a predictive cohort or churn model. It assumes order value, purchase frequency, gross margin and service cost remain constant. It does not estimate retention probability, expansion revenue, returns, refunds, taxes, overhead not entered, channel differences, seasonality, changing prices or uncertainty in customer lifespan. Segment customers when behavior differs materially and use observed CRM or transaction data whenever possible.
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Sources
- Shopify — average order value, purchase frequency, lifespan and basic CLV formula
- Salesforce — CLV, costs to serve, CAC and consistent periods
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