# CLTV Calculator – Customer Lifetime Value

URL: https://speedycalculator.com/calculators/finance/customer-lifetime-value/
Last updated: 2026-10-25

> The customer lifetime value calculator works out how much revenue and gross profit an average customer brings over their relationship with you – from the average order value, purchase frequency, customer lifespan (or churn rate) and margin – and the CLTV-to-CAC ratio.

## Inputs

- Average purchase value
- Purchases per year
- Lifespan from
- Customer lifespan (years)
- Yearly churn rate (%)
- Gross margin (%)
- Customer acquisition cost (CAC)

## Results

- Customer value per year
- Customer lifespan
- Customer lifetime value (revenue)
- Lifetime gross profit
- LTV:CAC ratio

## Formula

```
Customer value per year = average order value × purchases per year
Lifespan = 1 ÷ yearly churn (if using churn)
CLTV (revenue) = value per year × lifespan
CLTV (profit) = CLTV × gross margin; LTV:CAC = profit CLTV ÷ CAC
```

## Explanation

An LTV:CAC ratio of 3:1 or more is often considered healthy: each customer brings in three times what it costs to win them. Improving retention usually raises CLTV more than raising prices.

### How to use the CLTV Calculator – Customer Lifetime Value

- **Average purchase value**
- **Purchases per year**
- **Lifespan from**
- **Customer lifespan**
- **Yearly churn rate**
- **Gross margin**
- **Customer acquisition cost (CAC)**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the average purchase value, purchases per year, customer lifespan (or churn), gross margin and customer acquisition cost.

### Tips

- Know the difference between margin (profit ÷ price) and markup (profit ÷ cost).
- Apply successive discounts one after another – they do not simply add up.
- Check whether prices already include sales tax or VAT.
- Round prices only at the very end of the calculation.

### Common mistakes to avoid

- Adding discount percentages together.
- Pricing from a target margin using the markup formula.
- Forgetting payment-processing and shipping fees.

### Inputs explained

FieldWhat to enterAverage purchase valueAmount in your currencyPurchases per yearA numberLifespan fromChoose one: Years, Yearly churn rateCustomer lifespanIn yearsYearly churn rateIn %Gross marginIn %Customer acquisition cost (CAC)Amount in your currency

### What each result means

- **Customer value per year** = [Average purchase value]×[Purchases per year]
- **Customer lifetime value (revenue)** = [Customer value per year]×[Customer lifespan]
- **Lifetime gross profit** = [Customer lifetime value (revenue)]×[Gross margin]÷100
- **LTV:CAC ratio** = [Lifetime gross profit]÷[Customer acquisition cost (CAC)]

### Example values

How the main result changes when **Average purchase value** changes and everything else stays at the example values above:

Average purchase valueCustomer lifetime value (revenue)3060045900601,200751,500901,8001202,400

## Worked example

Inputs — Average purchase value: $60; Purchases per year: 5; Lifespan from: Years; Customer lifespan: 4 years; Yearly churn rate: 25 %; Gross margin: 40 %; Customer acquisition cost (CAC): $80.

Results — Customer value per year = $300.00; Customer lifespan = 4 years; **Customer lifetime value (revenue) = $1,200.00**; Lifetime gross profit = $480.00; LTV:CAC ratio = 6.

## FAQ

**What is a good CLTV?**
Any CLTV well above your acquisition cost – aim for LTV:CAC of 3:1 or more.

**How can I increase CLTV?**
Improve retention, encourage repeat purchases and upsell.

**Should CLTV use revenue or profit?**
Profit is more useful for decisions about acquisition spending.

**What formula does the CLTV Calculator – Customer Lifetime Value use?**
Customer value per year = average order value × purchases per year.