Customer lifetime value calculator — CLV, LTV:CAC and payback

Enter the average order value, how often a customer buys each year, how many years they stay and your gross margin, and the calculator estimates the gross profit one customer brings in over their lifetime — plus LTV:CAC and payback if you add your acquisition cost.

Live demo · real result from this tool
Customer lifetime value$360.00
Lifetime revenue
$600.00
Gross profit per customer per year
$120.00

This is a margin-based estimate from averages. Real customers churn at different rates — compare cohorts where you can.

Processed on your device — nothing is uploaded.

How to use the customer lifetime value calculator

  1. Enter the Average order value.
  2. Enter Purchases per customer per year — decimals are fine, for example 2.5.
  3. Enter the Customer lifespan in years and your Gross margin in percent.
  4. Optionally add a Discount rate and your Customer acquisition cost.
  5. Choose a Currency. The results update as you type.

What it does and when to use it

Customer lifetime value (CLV or LTV) estimates what an average customer is worth to your business over the whole relationship. It helps decide how much you can afford to spend to win a customer, whether a loyalty scheme pays for itself, and which channels bring customers worth keeping.

Use it when setting a marketing budget, comparing a subscription with one-off sales, or reviewing a channel’s cost per customer. With the acquisition cost filled in, you also get LTV:CAC and the months it takes for a customer’s gross profit to pay back that cost.

To turn the result into a channel budget, put it into a marketing plan. The ROI calculator checks a single campaign’s return, and the profit margin calculator helps you find the gross margin to enter here.

How it works

  • Yearly gross profit per customer = order value × purchases per year × gross margin
  • Lifetime revenue = order value × purchases per year × lifespan
  • Lifetime value (no discount) = yearly gross profit × lifespan
  • Discounted value = sum of yearly gross profit ÷ (1 + rate)^t for t = 1, 2, … years; a part-year at the end counts in proportion
  • LTV:CAC = lifetime value ÷ acquisition cost
  • CAC payback = acquisition cost ÷ yearly gross profit × 12 months

When a discount rate is set, the headline value and LTV:CAC use the discounted figure.

Worked examples

A webshop. $50 orders, 4 a year, 3 years, 60% margin: $120 gross profit a year, $600 lifetime revenue and $360 lifetime value. With a $100 acquisition cost the result is LTV:CAC: 3.6 : 1 and a 10-month payback.

The same shop, discounted. At a 10% discount rate: $120 ÷ 1.1 + $120 ÷ 1.21 + $120 ÷ 1.331 = Customer lifetime value: $298.42.

A monthly subscription. €15 a month (12 purchases a year), 2.5 years, 80% margin, 8% discount rate, €60 to acquire. Yearly gross profit is €144; the discounted value is €313.95 against €360 undiscounted. LTV:CAC is 5.23 : 1 and payback is 5 months.

Limits and tips

  • It uses averages. Real customers differ, and a few heavy buyers can lift the average; compare groups of customers who joined at the same time where you can.
  • Include every cost of winning customers in CAC — ad spend, discounts, sales time.
  • This is an estimate for planning, not financial advice.

Frequently asked questions

Why is lifetime value lower than lifetime revenue?
This calculator measures value as gross profit, not sales. A customer who spends $600 with you at a 60% gross margin leaves $360 to pay for marketing, overheads and profit. Comparing revenue with acquisition cost would make customers look more valuable than they are.
What discount rate should I use?
Leave it at 0 for a simple estimate. If customers stay several years, a discount rate makes later profit count for less, reflecting that money now is worth more than money later. Many businesses use their cost of capital; if you do not know it, try a few rates and see how much the result moves.
What is a good LTV:CAC ratio?
There is no single correct figure — it depends on your margins, cash and how sure you are of the lifespan estimate. The ratio simply says how many times over a customer repays the cost of winning them. A ratio below 1 means each new customer loses money.
How do I estimate customer lifespan?
From your own data if you can — for example, the average time between a customer's first and last order, or 1 ÷ yearly churn rate for a subscription. Lifespan has the biggest effect on the result, so be cautious.

How do we know nothing is uploaded? Test it yourself on the privacy proof page.

Written by the ToolsRift team · Last updated

Pages are drafted with AI assistance and checked by automated tests. How we write and check pages.

Was this tool useful?

Report a problem

Related tools

Start typing to search every tool.

↑ ↓ to moveEnter to openEsc to close