Free Customer Lifetime Value Calculator

The simple formula is average order value × purchases per year × number of years a customer stays. To get profit-based CLV, multiply by your gross margin. For example, $150 × 4 purchases × 3 years = $1,800 in lifetime revenue. This calculator handles both the revenue and profit versions.

It sets the ceiling on what you can profitably spend to acquire a customer. If a customer is worth $1,800 over time, spending $200 to acquire them is an easy win — even if the first sale barely breaks even. Businesses that budget on lifetime value can outbid competitors who only count the first purchase.

A common benchmark is a 3:1 ratio of lifetime value to customer acquisition cost — meaning you earn at least three times what it costs to win a customer. Below 1:1 you are losing money on every customer; above 5:1 you may actually be underinvesting in growth.

Increase any of the three levers: order value (upsells and bundles), purchase frequency (reminders and re-engagement), or retention (great service and follow-up). Automated CRM follow-up is usually the highest-leverage move because it lifts frequency and retention at the same time with little ongoing effort.