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Customer lifetime value (CLV) calculator

What a customer is worth over the whole relationship: margin per period ÷ (1 + discount − retention), which also tells you the average lifespan 1/(1 − retention). Higher retention and margin stretch it; the discount rate reins it back to today's money.

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The Customer lifetime value (CLV) calculator turns Revenue per customer / period, Gross margin (%), Retention rate per period (%), Discount rate per period (%) into Customer lifetime value, Average lifespan (periods), Margin per period, instantly and for free. For instance, with Revenue per customer / period = $85.00, Gross margin (%) = 70, Retention rate per period (%) = 85 and Discount rate per period (%) = 10 it returns Customer lifetime value = $238.00, Average lifespan (periods) = 6.667 and Margin per period = $59.50.

How to use it

  1. Enter your values: Revenue per customer / period, Gross margin (%), Retention rate per period (%), Discount rate per period (%).
  2. Read the result instantly: Customer lifetime value, Average lifespan (periods), Margin per period.

Frequently asked questions

What does the Customer lifetime value (CLV) calculator actually compute?

It takes Revenue per customer / period, Gross margin (%), Retention rate per period (%) and Discount rate per period (%) and derives Customer lifetime value, Average lifespan (periods) and Margin per period from them. The calculation is live as you type, so the result updates on every change.

What information do I need to provide?

4 values: Revenue per customer / period ($), Gross margin (%), Retention rate per period (%) and Discount rate per period (%). Nothing else is required — no account, no file upload.

Can you show a worked example?

With Revenue per customer / period = $85.00, Gross margin (%) = 70, Retention rate per period (%) = 85 and Discount rate per period (%) = 10, the calculator returns Customer lifetime value = $238.00, Average lifespan (periods) = 6.667 and Margin per period = $59.50. Those figures come from running this exact tool, so you can reproduce them by entering the same values.

What happens if I enter larger values?

It moves a lot. Using Revenue per customer / period = $170.00, Gross margin (%) = 77, Retention rate per period (%) = 94 and Discount rate per period (%) = 11 instead, Customer lifetime value goes from $238.00 to $770.00 — which is why it is worth testing a few scenarios rather than trusting a single figure.

What does it give for smaller values?

Scaled down to Revenue per customer / period = $43.00, Gross margin (%) = 63, Retention rate per period (%) = 77 and Discount rate per period (%) = 9, Customer lifetime value comes out at $84.66. The relationship is worth checking at both ends before you rely on a single result.

When would I actually use this?

Reporting to an investor or a board: what recurring revenue really is this month, what churn is costing, and how long it takes to earn back an acquisition.

What is the most common mistake?

Counting annual contracts at their full value in the month they are signed. MRR is the monthly-equivalent figure; booking a year of revenue in one month makes growth look like a step change that then reverses.

How accurate is it, and what are the limits?

Estimate only — not financial advice.

What is the difference between the Customer lifetime value (CLV) calculator and the Customer Acquisition Cost (CAC) Calculator?

This one returns Customer lifetime value and Average lifespan (periods); the Customer Acquisition Cost (CAC) Calculator returns Result. That is the whole difference — open the one whose figure you need.

Is there a tool for the next step?

CAC payback period calculator is the closest one after this: Find how many months it takes to recover the cost of acquiring a customer.

Further reading

All guides →
ExplainerWhat LTV:CAC Ratio Should You Target? The Churn Estimate Decides ItEveryone quotes 3:1 and nobody states their churn assumption. With $100 ARPU and an 80 percent gross margin, moving monthly churn from 2 to 3 percent drops the ratio from 4.0:1 to 2.67:1 — a pass turned into a fail by one percentage point.ExplainerWhat Is Customer Lifetime Value (LTV)? Formula and UsesCustomer lifetime value estimates the total worth of a customer over the whole relationship. Learn the formula, why margin matters, and how to use it.ExplainerWhat Is Customer Churn Rate? Formula and How to Reduce ItCustomer churn rate measures how fast you lose customers. Learn the formula, why it caps growth and shortens lifetime value, and how to reduce it.ExplainerWhat Is Customer Acquisition Cost (CAC)? Formula and BenchmarksCustomer acquisition cost tells you what it really costs to win a new customer. Learn the formula, what to include, and how to read it against lifetime value.ExplainerWhat Is the Rule of 40? Six Ways to Score Exactly 40Growth rate plus profit margin should clear 40. But 60 percent growth at a minus 20 percent margin scores the same as 10 percent growth at a 30 percent margin — and on $10M of revenue those are opposite companies.ExplainerMRR and the Arithmetic of Recurring RevenueMonthly recurring revenue is a normalised run rate, not revenue earned. Normalise it wrong and every downstream number is wrong. Here is the movement analysis that explains the figure, and why net revenue retention decides whether growth compounds.