Customer Lifetime Value Calculator

This calculator works out your customer lifetime value, or CLV, the total profit an average customer brings over the whole time they buy from you, and from that, the most you can sensibly afford to spend to win a new customer. Understanding this single number transforms how a business markets and grows. Too many businesses look only at the profit on a first sale and conclude that advertising does not pay, when in reality a loyal customer who returns for years is worth many times that first transaction. CLV captures that full value. It is built from four things: how much a customer spends on average per purchase, how often they buy in a year, how many years they stay a customer, and your gross margin, because it is profit, not revenue, that you can spend to acquire them. You enter these four figures and the calculator returns the customer lifetime value, the annual value of a customer, the total lifetime revenue before margin, and a suggested maximum acquisition cost based on the common rule of keeping customer acquisition cost to about a third of lifetime value. This is the figure that tells you whether your marketing spend is sustainable: if it costs less than that to win a customer, you can confidently invest more to grow. Use it to set advertising budgets, to justify loyalty and retention programmes, since extending how long customers stay directly lifts CLV, and to value your customer base. Be realistic about retention, as it is the input people most often overstate. This is a planning estimate; real customer behaviour varies, so refine the inputs with your own sales data.

CLV is profit-based using your margin. Max acquisition cost uses the common one-third-of-CLV rule of thumb. An estimate; refine with your data.