Customer Lifetime Value Calculator
Calculate the total revenue a customer generates over their relationship with your store.
Results
Visualization
How It Works
Customer Lifetime Value (CLV) is the total revenue — or profit — a single customer generates over their entire relationship with your business. It tells you how much a customer is worth, which determines how much you can afford to spend acquiring them. A high CLV allows you to outspend competitors on acquisition and still be profitable.
The Formula
Variables
- AOV — Average order value per purchase
- f — Purchase frequency (times per year)
- L — Average customer lifespan in years
- m — Profit margin as a decimal
- CAC — Cost to acquire one new customer
Worked Example
A customer spends $75 per order, orders 3 times per year, and stays for 3 years. CLV = $75 × 3 × 3 = $675. With a 30% profit margin, CLV (profit) = $675 × 0.30 = $202.50. If your CAC is $50, your CLV:CAC ratio is $202.50 / $50 = 4.05x — healthy. Your maximum recommended CAC to maintain a 3:1 ratio is $202.50 / 3 = $67.50.
Practical Tips
- A CLV:CAC ratio of 3:1 is a widely used target — you keep $3 in profit for every $1 spent on acquisition.
- Increasing AOV through upsells and bundles has a compounding effect on CLV — even a 10% AOV increase multiplies across all future purchases.
- Subscription and replenishment products (supplements, skincare) have naturally high CLV due to high purchase frequency.
- Email and SMS retention programs are among the cheapest ways to extend customer lifespan and increase CLV.
- Segment CLV by acquisition channel — customers from referrals often have 2-3x higher CLV than customers from paid ads.
Frequently Asked Questions
What is the difference between CLV and LTV?
CLV (Customer Lifetime Value) and LTV (Lifetime Value) are used interchangeably. Both refer to the total value a customer delivers over the course of their relationship with your business. Some sources also use CLTV. They all mean the same thing.
How do I increase customer lifetime value?
The three levers for increasing CLV are: raising average order value (bundles, upsells, free shipping thresholds), increasing purchase frequency (subscriptions, loyalty programs, email flows), and extending customer lifespan (great service, community, personalization).
Should I use revenue CLV or profit CLV?
Profit CLV is the more useful metric because it tells you how much you can actually afford to spend on acquisition. Revenue CLV can be misleading if your margins are thin. Always calculate both and use profit CLV for acquisition budget decisions.
What is a good CLV for an e-commerce store?
There is no universal benchmark — it depends entirely on your niche, price point, and purchase frequency. What matters most is the CLV:CAC ratio. A ratio of 3:1 or higher is generally considered healthy for sustainable growth.
How do new stores calculate CLV without historical data?
New stores can estimate CLV using industry benchmarks for their niche, survey data on purchase intent, or cohort analysis after just 60-90 days. Start with conservative estimates and update your model every quarter as you accumulate real customer data.