Customer Lifetime Value (CLV) Calculator
What a Customer Is Actually Worth Over Time
A single sale tells you almost nothing about whether a customer relationship is profitable. Customer Lifetime Value (CLV) instead projects the total revenue a typical customer generates across the entire time they keep buying, which is the number that should really be driving how much a business is willing to spend to win them in the first place.
The Formula
CLV = Average Customer Value × Customer Lifespan
Purchase frequency is expressed as purchases per year and lifespan as years, so the two multiply together into an annual value that then compounds across the full relationship.
Worked Examples
| Avg Purchase Value | Purchase Frequency (per year) | Lifespan (years) | CLV |
|---|---|---|---|
| $85 | 4 | 5 | $1,700.00 |
| $40 | 12 | 3 | $1,440.00 |
| $200 | 2 | 8 | $3,200.00 |
Small changes in purchase frequency compound the same way small changes in lifespan do — a customer who buys twice as often is worth exactly twice as much under this formula, all else equal.
Why This Number Matters
- Setting an acquisition budget — CLV is the ceiling that customer acquisition cost should stay comfortably under; see the LTV:CAC Ratio Calculator for that comparison directly.
- Prioritizing segments — comparing CLV across customer cohorts shows which segments are worth the most marketing and retention investment.
- Pricing and loyalty program design — modeling how a change in purchase frequency or average order value shifts long-run value before rolling out a program.
- Forecasting — multiplying CLV by expected new customer counts gives a rough projection of future revenue from a cohort.
How to Use This Calculator
- Enter the Average Purchase Value ($) — the typical amount a customer spends per transaction.
- Enter the Purchase Frequency (per year) — how many times a customer buys in a typical year.
- Enter the Customer Lifespan (years) — how many years a customer typically continues buying.
- Select Calculate to get the projected lifetime value per customer.
Related Calculations
Pair this with the Customer Retention Calculator — retention improvements directly extend the lifespan input used here.