{"id":67411,"date":"2026-10-21T10:21:59","date_gmt":"2026-10-21T07:21:59","guid":{"rendered":"https:\/\/wpcalc.com\/en\/?p=67411"},"modified":"2026-10-21T10:21:59","modified_gmt":"2026-10-21T07:21:59","slug":"customer-lifetime-value-clv-calculator","status":"publish","type":"post","link":"https:\/\/wpcalc.com\/en\/finance\/customer-lifetime-value-clv-calculator\/","title":{"rendered":"Customer Lifetime Value (CLV) Calculator"},"content":{"rendered":"<section class=\"not-prose calculator-box\" aria-labelledby=\"calculator-title\"><div class=\"flex items-baseline sm:items-center justify-between gap-2 sm:gap-3\"><div class=\"flex flex-col sm:flex-row sm:items-center gap-2\"><span class=\"icon icon-calculator text-primary-700! text-base! dark:text-primary-300!\" aria-hidden=\"true\"><\/span><h2 id=\"calculator-title\" class=\"text-lg font-display font-bold\">Find What a Customer Is Worth Over Their Lifetime<\/h2><\/div><div class=\"calcdash-favorite group\">\n  <button type=\"button\" class=\"favorite\" id=\"favorite\" data-favorite-id=\"67411\" data-favorite-title=\"CLV\" data-favorite-url=\"https:\/\/wpcalc.com\/en\/finance\/customer-lifetime-value-clv-calculator\/\" data-favorite-excerpt=\"Estimate customer lifetime value for product sales or subscription businesses. Enter order value, margins, retention and acquisition cost to get CLV, the discounted present value, CLV:CAC ratio and CAC payback period.\" aria-label=\"Add to Favorites\" data-favorite-icon=\"icon icon-investment\">\n    <span class=\"icon icon-shape-star-empty\" aria-hidden=\"true\"><\/span>\n  <\/button>\n  <div class=\"calcdash-favorite__tip\" aria-hidden=\"true\">\n   <span class=\"favorite-tooltip\" id=\"favorite-tooltip\"><\/span>\n  <\/div>\n  <span class=\"sr-only\" role=\"status\" id=\"favorite-status\"><\/span>\n<\/div><\/div><form action=\"https:\/\/wpcalc.com\/en\/finance\/customer-lifetime-value-clv-calculator\/\" method=\"POST\" class=\"calculator\" id=\"calculator-67411\" data-post=\"67411\"><fieldset class=\"fieldset-input is-2\"><legend class=\"sr-only\">Input Fields<\/legend><div class=\"field is-single\" id=\"input-1\"><label for=\"field-1\">Business model<\/label><div class=\"grid grid-cols-1\"><select id=\"field-1\" name=\"business_model\"><option value=\"purchase\" selected>Product sales \u2014 repeat purchases<\/option><option value=\"sub\">Subscription<\/option><\/select><svg class=\"pointer-events-none col-start-1 row-start-1 mr-2 size-5 self-center justify-self-end text-gray-500 sm:size-4\" viewBox=\"0 0 16 16\" fill=\"currentColor\" aria-hidden=\"true\" data-slot=\"icon\">\n              <path fill-rule=\"evenodd\" d=\"M4.22 6.22a.75.75 0 0 1 1.06 0L8 8.94l2.72-2.72a.75.75 0 1 1 1.06 1.06l-3.25 3.25a.75.75 0 0 1-1.06 0L4.22 7.28a.75.75 0 0 1 0-1.06Z\" clip-rule=\"evenodd\" \/>\n            <\/svg><\/div><\/div><div class=\"is-single field\" id=\"input-2\"><span class=\"font-semibold\">Your customers (product purchases)<\/span><\/div><div class=\"field has-term\" id=\"input-3\"><label for=\"field-3\">Average order value<\/label><div class=\"term\">AOV<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><input type=\"text\" name=\"average_order_value\" id=\"field-3\" aria-describedby=\"calc-unit-3\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0.01\" value=\"60\"\/><div class=\"unit\" id=\"calc-unit-3\">$<\/div><\/div><div class=\"field has-term\" id=\"input-4\"><label for=\"field-4\">Purchases per year<\/label><div class=\"term\">f<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><input type=\"text\" name=\"purchases_per_year\" id=\"field-4\" aria-describedby=\"calc-unit-4 calc-info-4\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0\" value=\"4\"\/><div class=\"unit\" id=\"calc-unit-4\">\/yr<\/div><small id=\"calc-info-4\">How many orders an average customer places in a year.<\/small><\/div><div class=\"field has-term\" id=\"input-5\"><label for=\"field-5\">Gross margin<\/label><div class=\"term\">m<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><input type=\"text\" name=\"gross_margin\" id=\"field-5\" aria-describedby=\"calc-unit-5\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0\" max=\"100\" value=\"50\"\/><div class=\"unit\" id=\"calc-unit-5\">%<\/div><\/div><div class=\"field has-term\" id=\"input-6\"><label for=\"field-6\">Customer lifespan<\/label><div class=\"term\">L<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><div class=\"field-group\"><input type=\"text\" name=\"customer_lifespan\" id=\"field-6\" aria-describedby=\"calc-info-6\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0\" value=\"3\"\/><div class=\"grid grid-cols-1\"><select id=\"field-7\" name=\"basis\" aria-label=\"Basis\"><option value=\"years\" selected>Years<\/option><option value=\"churn\">% churn per year<\/option><\/select><svg class=\"pointer-events-none col-start-1 row-start-1 mr-2 size-5 self-center justify-self-end text-gray-500 sm:size-4\" viewBox=\"0 0 16 16\" fill=\"currentColor\" aria-hidden=\"true\" data-slot=\"icon\">\n              <path fill-rule=\"evenodd\" d=\"M4.22 6.22a.75.75 0 0 1 1.06 0L8 8.94l2.72-2.72a.75.75 0 1 1 1.06 1.06l-3.25 3.25a.75.75 0 0 1-1.06 0L4.22 7.28a.75.75 0 0 1 0-1.06Z\" clip-rule=\"evenodd\" \/>\n            <\/svg><\/div><\/div><small id=\"calc-info-6\">Enter an average lifespan in years, or an annual churn rate \u2014 with churn, lifespan = 1 \u00f7 churn.<\/small><\/div><div class=\"is-single field\" id=\"input-7\" hidden><span class=\"font-semibold\">Your subscribers<\/span><\/div><div class=\"field has-term\" id=\"input-8\" hidden><label for=\"field-9\">Monthly revenue per user<\/label><div class=\"term\">ARPU<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><input type=\"text\" name=\"monthly_revenue_per_user\" id=\"field-9\" aria-describedby=\"calc-unit-9\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0.01\" value=\"25\"\/><div class=\"unit\" id=\"calc-unit-9\">$\/mo<\/div><\/div><div class=\"field has-term\" id=\"input-9\" hidden><label for=\"field-10\">Gross margin<\/label><div class=\"term\">m<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><input type=\"text\" name=\"gross_margin\" id=\"field-10\" aria-describedby=\"calc-unit-10\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0\" max=\"100\" value=\"80\"\/><div class=\"unit\" id=\"calc-unit-10\">%<\/div><\/div><div class=\"field\" id=\"input-10\" hidden><label for=\"field-11\">Monthly churn<\/label><input type=\"text\" name=\"monthly_churn\" id=\"field-11\" aria-describedby=\"calc-unit-11 calc-info-11\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0\" max=\"100\" value=\"5\"\/><div class=\"unit\" id=\"calc-unit-11\">%<\/div><small id=\"calc-info-11\">Share of subscribers who cancel each month \u2014 5% monthly churn means an average stay of 20 months.<\/small><\/div><div class=\"is-single field\" id=\"input-11\"><span class=\"font-semibold\">Optional \u2014 discounting and acquisition cost<\/span><\/div><div class=\"field has-term\" id=\"input-12\"><label for=\"field-13\">Discount rate<\/label><div class=\"term\">d<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><input type=\"text\" name=\"discount_rate\" id=\"field-13\" aria-describedby=\"calc-unit-13 calc-info-13\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0\" max=\"90\" value=\"10\"\/><div class=\"unit\" id=\"calc-unit-13\">%<\/div><small id=\"calc-info-13\">Annual rate used to discount future profits to present-day dollars. Enter 0 to ignore discounting.<\/small><\/div><div class=\"field has-term\" id=\"input-13\"><label for=\"field-14\">Customer acquisition cost<\/label><div class=\"term\">CAC<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><input type=\"text\" name=\"customer_acquisition_cost\" id=\"field-14\" aria-describedby=\"calc-unit-14 calc-info-14\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0\" value=\"50\"\/><div class=\"unit\" id=\"calc-unit-14\">$<\/div><small id=\"calc-info-14\">Marketing and sales cost to win one customer. Leave blank to skip the CLV:CAC ratio and payback.<\/small><\/div><\/fieldset><div class=\"buttons\"><button type=\"submit\" data-text=\"Re-Calculate\" id=\"calculate-button\" data-post=\"67411\">Calculate<\/button><button type=\"reset\">Reset<\/button><\/div><div class=\"field is-checkbox hidden!\" id=\"field-auto-calc\"><input type=\"checkbox\" id=\"auto-calc\"><label for=\"auto-calc\">Calculate automatically<\/label><small>If enabled, the result will update automatically when you change any value.<\/small><\/div><div class=\"fieldset-result is-hidden\" aria-labelledby=\"result-title\" aria-live=\"polite\" role=\"region\"> <h3 class=\"result-title bg-gradient-to-r from-primary-50 to-gray-50 dark:from-primary-900 dark:to-gray-800\" id=\"result-title\"><span class=\"icon icon-s-pulse\" aria-hidden=\"true\"><\/span> Your CLV Analysis<\/h3><div class=\"result-box\"><div class=\"field-result is-column\" id=\"output-1\"><span class=\"field-title\"><span>Summary<\/span><\/span><span class=\"field-value\" id=\"result-1\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><div class=\"field-result\" id=\"output-2\"><span class=\"field-title\"><span>Customer lifetime value (CLV)<\/span><\/span><span class=\"field-value\" id=\"result-2\" data-unit=\"$\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><div class=\"field-result\" id=\"output-3\"><span class=\"field-title\"><span>Gross profit per customer per year<\/span><\/span><span class=\"field-value\" id=\"result-3\" data-unit=\"$\/yr\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><div class=\"field-result\" id=\"output-4\"><span class=\"field-title\"><span>Gross profit per customer per month<\/span><\/span><span class=\"field-value\" id=\"result-4\" data-unit=\"$\/mo\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><div class=\"field-result\" id=\"output-5\"><span class=\"field-title\"><span>Expected customer lifespan<\/span><\/span><span class=\"field-value\" id=\"result-5\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><div class=\"field-result\" id=\"output-6\"><span class=\"field-title\"><span>Discounted CLV (present value)<\/span><\/span><span class=\"field-value\" id=\"result-6\" data-unit=\"$\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><div class=\"field-result\" id=\"output-7\"><span class=\"field-title\"><span>CLV : CAC ratio<\/span><\/span><span class=\"field-value\" id=\"result-7\" data-unit=\": 1\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><div class=\"field-result\" id=\"output-8\"><span class=\"field-title\"><span>CAC payback period<\/span><\/span><span class=\"field-value\" id=\"result-8\" data-unit=\"months\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><div class=\"field-result is-column\" id=\"output-9\"><span class=\"field-title\"><span>CLV:CAC health check<\/span><\/span><span class=\"field-value\" id=\"result-9\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><\/div><div class=\"result-actions\"><button type=\"button\" class=\"copy-link\"><svg viewBox=\"0 0 20 20\" fill=\"currentColor\" aria-hidden=\"true\"><path d=\"M12.232 4.232a2.5 2.5 0 0 1 3.536 3.536l-1.225 1.224a.75.75 0 0 0 1.061 1.06l1.224-1.224a4 4 0 0 0-5.656-5.656l-3 3a4 4 0 0 0 .225 5.865.75.75 0 0 0 .977-1.138 2.5 2.5 0 0 1-.142-3.667l3-3Z\"\/><path d=\"M11.603 7.963a.75.75 0 0 0-.977 1.138 2.5 2.5 0 0 1 .142 3.667l-3 3a2.5 2.5 0 0 1-3.536-3.536l1.225-1.224a.75.75 0 0 0-1.061-1.06l-1.224 1.224a4 4 0 1 0 5.656 5.656l3-3a4 4 0 0 0-.225-5.865Z\"\/><\/svg><span class=\"copy-link__text\">Copy link to this calculation<\/span><\/button><span class=\"sr-only\" role=\"status\" id=\"copy-link-status\"><\/span><\/div><\/div><a href=\"#respond\" class=\"hidden transition-opacity duration-300 opacity-0 w-50 text-sm justify-center items-center gap-2 px-4 py-2 rounded bg-gray-200 text-gray-700 hover:bg-gray-300\" id=\"leave-comment\"><span class=\"icon icon-comments\" aria-hidden=\"true\"><\/span>Leave a Comment<\/a><\/form><\/section><section id=\"calc-reactions\" class=\"not-prose hidden my-12 bg-gradient-to-r from-primary-50 to-gray-50 border border-indigo-100 rounded-xl px-6 py-4 shadow-sm\" data-post=\"67411\" aria-live=\"polite\" aria-labelledby=\"calc-reactions-title\"><p id=\"calc-reactions-title\" class=\"text-sm text-gray-500 text-center mb-2\">How did this result make you feel?<\/p><div role=\"group\" aria-labelledby=\"calc-reactions-title\" class=\"grid grid-cols-3 sm:flex sm:flex-row sm:justify-around gap-4 sm:items-center sm:flex-wrap\"><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"like\"><span class=\"reaction-count\" data-reaction-count=\"like\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\ud83d\ude00 <\/span><span class=\"reaction-description font-medium\">Like <\/span><\/button><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"helpful\"><span class=\"reaction-count\" data-reaction-count=\"helpful\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\ud83d\udca1 <\/span><span class=\"reaction-description font-medium\">Helpful <\/span><\/button><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"confused\"><span class=\"reaction-count\" data-reaction-count=\"confused\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\ud83d\ude15 <\/span><span class=\"reaction-description font-medium\">Confused <\/span><\/button><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"disappointed\"><span class=\"reaction-count\" data-reaction-count=\"disappointed\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\ud83d\ude1e <\/span><span class=\"reaction-description font-medium\">Disappointed <\/span><\/button><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"inaccurate\"><span class=\"reaction-count\" data-reaction-count=\"inaccurate\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\u274c <\/span><span class=\"reaction-description font-medium\">Inaccurate <\/span><\/button><\/div><div id=\"reaction-message\" class=\"hidden mt-8 rounded-md border border-primary-100 bg-white\/50 backdrop-blur-sm px-4 py-2 text-sm text-center shadow-sm\"><\/div><\/section><div class=\"calcdash-ad not-prose calcdash-ad--calc_result calcdash-ad--in-article\"><ins class=\"adsbygoogle\" style=\"display:block\" data-ad-client=\"ca-pub-1721569815777345\" data-ad-slot=\"6317458308\" data-ad-layout=\"in-article\" data-ad-format=\"fluid\"><\/ins><script>(adsbygoogle = window.adsbygoogle || []).push({});<\/script><\/div>\n<style id=\"wpcoderpro-inline-1\">.formula-box {\r\n\tborder-bottom: none !important;\r\n}<\/style><section class=\"formula-box\" aria-labelledby=\"formula-title\">\r\n\t<div id=\"formula-title\" class=\"not-prose font-display mb-4\"><span class=\"icon icon-formula\" aria-hidden=\"true\"><\/span><h2>CLV Formula<\/h2><\/div>\r\n\t<figure class=\"not-prose formula\">\r\n\t\t<figcaption class=\"formula-title\">Formula<\/figcaption>\r\n\t\t<div class=\"text-base text-gray-800\" id=\"formula\">\n\\[ \\text{CLV} = AOV \\times f \\times \\frac{m}{100} \\times L \\\\\n\\[ \\text{CLV} = \\frac{ARPU \\times \\dfrac{m}{100} \\times 12}{c} \\\\\n\\[ \\text{CLV}_{disc} = \\sum_{t=1}^{L} \\frac{AOV \\times f \\times \\frac{m}{100}}{(1+d)^{t}}\n<\/div>\r\n\t<\/figure>\r\n\t<\/p>\n<p><strong>Where:<\/strong><\/p>\n<ul>\n<li>\\(AOV\\) \u2014 average order value ($)<\/li>\n<li>\\(f\\) \u2014 purchase frequency, orders per customer per year<\/li>\n<li>\\(m\\) \u2014 gross margin (%), i.e. revenue minus cost of goods sold<\/li>\n<li>\\(L\\) \u2014 average customer lifespan in years; with churn \\(L = 1 \\div c\\)<\/li>\n<li>\\(ARPU\\) \u2014 monthly revenue per user ($\/mo)<\/li>\n<li>\\(c\\) \u2014 churn rate: monthly churn for subscriptions, annual churn in months for product businesses<\/li>\n<li>\\(d\\) \u2014 annual discount rate (%), to express future profit in present-day dollars<\/li>\n<\/ul>\n<p>The first formula applies to repeat product purchases: annual gross profit per customer times lifespan. The second is the subscription equivalent, since monthly profit divided by monthly churn equals profit times lifespan. The third discounts future profit flows so that money earned years from now is valued correctly today.<\/p>\n<p>\r\n<\/section>\n<style id=\"wpcoderpro-inline-459\">.calculation-box {\r\n\tborder-bottom: none !important;\r\n}<\/style><section id=\"calculation\" class=\"calculation-box\" aria-labelledby=\"calculation-title\">\r\n\t<div id=\"calculation-title\" class=\"not-prose font-display\"><span class=\"icon icon-unordered-list\" aria-hidden=\"true\"><\/span><h2>CLV \u2013 Calculation Example<\/h2><\/div>\r\n\r\n<\/p>\n<p><strong>Example:<\/strong> an online store with the calculator's default values \u2014 an average order value of $60, 4 purchases per year, a 50% gross margin, an average customer lifespan of 3 years, a 10% discount rate and a customer acquisition cost of $50.<\/p>\n<p>\\[ \\text{Annual profit} = 60 \\times 4 \\times 0.50 = 120 \\text{ \\$\/yr} \\]<\/p>\n<p>\\[ \\text{CLV} = 120 \\times 3 = 360 \\text{ \\$} \\]<\/p>\n<p>\\[ \\text{CLV}_{disc} = \\frac{120}{1.1} + \\frac{120}{1.1^2} + \\frac{120}{1.1^3} = 298.42 \\text{ \\$} \\]<\/p>\n<p>\\[ \\text{CLV:CAC} = \\frac{360}{50} = 7.2 \\text{ : 1}, \\qquad \\text{Payback} = \\frac{50}{\\;10\\text{ \\$\/mo}\\;} = 5 \\text{ months} \\]<\/p>\n<p><strong>Result:<\/strong> CLV = $360 ($298.42 discounted at 10% a year), a CLV:CAC ratio of 7.2 : 1 and a CAC payback period of 5 months.<\/p>\n<p>\n\r\n<\/section>\n<h2>How to use the calculator<\/h2>\n<ol>\n<li>Choose your <strong>Business model<\/strong>: \"Product sales \u2014 repeat purchases\" or \"Subscription\". The input fields switch accordingly.<\/li>\n<li>For product sales, enter <strong>Average order value<\/strong>, <strong>Purchases per year<\/strong> and <strong>Gross margin<\/strong> as a percentage.<\/li>\n<li>Enter <strong>Customer lifespan<\/strong>. Use the \"Basis\" selector to give either an average in years or an annual churn rate \u2014 the calculator converts churn to lifespan with \\(L = 1 \\div \\text{churn}\\), so 25% churn per year means a 4-year lifespan.<\/li>\n<li>For subscriptions, enter <strong>Monthly revenue per user<\/strong>, <strong>Gross margin<\/strong> and <strong>Monthly churn<\/strong> instead.<\/li>\n<li>Optionally set a <strong>Discount rate<\/strong> (annual) to see the present value of future profits, and enter a <strong>Customer acquisition cost<\/strong> to get the CLV:CAC ratio, the CAC payback period and a health check against the 3:1 benchmark.<\/li>\n<\/ol>\n<h2>What customer lifetime value means<\/h2>\n<p>Customer lifetime value (CLV) is the total gross profit an average customer generates over the entire time they do business with you \u2014 before subtracting what it cost to win them. It answers the most basic question of unit economics: is one customer worth more to the business than they cost? The calculator computes CLV on a gross-profit basis, because revenue alone can be misleading: a customer who spends $1,000 a year at a 20% margin is worth less than one who spends $500 at 60%.<\/p>\n<p>CLV matters because it sets a ceiling on what you can afford to spend on marketing. If a customer is worth $360 of gross profit, paying $50 to acquire them is an excellent trade; paying $400 is a loss on every single customer, no matter how fast you grow. Comparing CLV with customer acquisition cost (CAC) is the standard way to judge this, and the widely used rule of thumb calls for a CLV:CAC ratio of at least 3:1 \u2014 the buffer covers overheads, refunds, discounts and the customers who leave earlier than average.<\/p>\n<p>Interpret the results together rather than in isolation. The <em>simple CLV<\/em> shows the raw lifetime profit; the <em>discounted CLV<\/em> shrinks it to present-day dollars, which is the more honest figure when lifespans are long. The <em>payback period<\/em> tells you how long your acquisition money is tied up \u2014 a $5,000 ad budget behaves very differently when it comes back in 5 months than in 5 years.<\/p>\n<p>A useful complement when analyzing subscription economics is the <a href=\"https:\/\/wpcalc.com\/en\/finance\/cpm-calculator-cost-per-thousand-impressions\/\">CPM calculator<\/a> for ad costs, and the <a href=\"https:\/\/wpcalc.com\/en\/finance\/ebit-margin\/\">EBIT margin calculator<\/a> for checking how gross margin translates into operating profit.<\/p>\n<h2>Assumptions and limitations<\/h2>\n<ul>\n<li>The model assumes a <strong>steady state<\/strong>: constant order value, frequency, margin and churn over the whole lifespan. Real customers often drift \u2014 they buy more in year one, then lapse \u2014 so treat the result as a directional estimate, not an accounting figure.<\/li>\n<li>CLV here is <strong>gross profit based<\/strong>, which is the most common convention. It excludes variable serving and support costs beyond cost of goods, and it excludes fixed overheads entirely \u2014 that is exactly why the 3:1 benchmark leaves headroom.<\/li>\n<li>With churn-based lifespans, the formula assumes churn is spread evenly per period (a geometric survival curve). For subscriptions this is standard; for seasonal product businesses, entering an average lifespan in years is usually more realistic.<\/li>\n<li>Discounting matters most for long lifespans and high discount rates. With short lifespans the discounted and simple CLV converge; if in doubt, compare both outputs the calculator provides.<\/li>\n<li>The benchmark bands are rules of thumb, not laws. A 2:1 ratio can be fine with a very short payback period; a 10:1 ratio can mean you are under-investing in growth while competitors buy market share.<\/li>\n<li>Segment your customers if you can. An average CLV over a mixed customer base hides both your best and worst cohorts \u2014 a CLV computed separately per channel or per segment is far more actionable.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Estimate customer lifetime value for product sales or subscription businesses. Enter order value, margins, retention and acquisition cost to get CLV, the discounted present value, CLV:CAC ratio and CAC payback period.<\/p>\n","protected":false},"author":3168,"featured_media":0,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5],"tags":[27],"class_list":["post-67411","post","type-post","status-publish","format-standard","hentry","category-finance","tag-investment"],"acf":[],"_links":{"self":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts\/67411","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/users\/3168"}],"replies":[{"embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/comments?post=67411"}],"version-history":[{"count":1,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts\/67411\/revisions"}],"predecessor-version":[{"id":67412,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts\/67411\/revisions\/67412"}],"wp:attachment":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/media?parent=67411"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/categories?post=67411"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/tags?post=67411"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}