Customer Lifetime Value (CLV/LTV) Calculator

What is customer lifetime value (CLV or LTV)?

Customer lifetime value (CLV), often also called lifetime value (LTV), is a planning estimate of the total revenue or gross profit a business expects to earn from an average customer relationship, from the point a customer starts buying until they are expected to stop. It is not a guaranteed forecast: it is a projection built on a small set of stated assumptions — average revenue, gross margin, and either a churn rate or a purchase pattern — held constant over the customer's expected lifetime.

This calculator supports two common ways of estimating CLV. Subscription / Churn mode fits recurring-revenue businesses where customers pay repeatedly until they cancel. Transactional / Purchase behavior mode fits businesses where customers make discrete purchases at some frequency over a known or estimated lifespan, such as e-commerce or repeat-service businesses.

This page estimates customer lifetime value only. Use the LTV:CAC Ratio Calculator when you want to compare lifetime value with acquisition cost.

Revenue CLV/LTV vs gross-profit CLV/LTV

Revenue CLV is the total revenue expected from a customer over their lifetime. It is a useful top-line reference point, but it says nothing about profitability: two customers with identical revenue CLV can be very different in value if one costs far more to serve.

Gross-profit CLV nets out the cost of delivering the product or service (using your gross margin), so it reflects what the business actually keeps before overhead, acquisition cost, and taxes. This calculator treats gross-profit CLV as the primary, decision-useful figure. It is not the same as net profit — see below.

How the subscription/churn formula works

In Subscription / Churn mode, the expected customer lifespan is estimated as the mathematical reciprocal of the churn rate for a single period:

Expected lifespan = 1 ÷ Churn rate

From there:

• Revenue CLV = Average revenue per customer ÷ Churn rate
• Gross-profit CLV = (Average revenue per customer × Gross margin) ÷ Churn rate

A churn rate of exactly 0% would make the reciprocal (and therefore CLV) mathematically unbounded, so this calculator requires churn to be greater than 0%. A churn rate of 100% is valid and simply means the expected lifespan is a single period.

How the transactional formula works

In Transactional / Purchase behavior mode, CLV is built up directly from order economics and an estimated customer lifespan in years:

• Annual revenue per customer = Average order value × Purchase frequency
• Revenue CLV = Average order value × Purchase frequency × Customer lifespan
• Gross-profit CLV = Average order value × Purchase frequency × Customer lifespan × Gross margin

Purchase frequency and customer lifespan both accept decimal values, since real purchase patterns and lifespans are rarely whole numbers.

Why revenue, margin, churn, frequency, and lifespan must use consistent time assumptions

In Subscription / Churn mode, average revenue per customer and churn rate must both refer to the exact same period — both monthly, both quarterly, or both annual. This calculator does not convert between periods for you: if you enter a monthly revenue figure alongside an annual churn rate, the result will be silently wrong rather than flagged as an error, because there is no reliable way to detect that mismatch from the numbers alone.

In Transactional / Purchase behavior mode, purchase frequency is always expressed per year and lifespan is always expressed in years, so the two are already aligned by design.

What this calculator does not include

This calculator deliberately keeps its scope narrow. It does not include:

• Customer acquisition cost (CAC) or any CAC-to-CLV ratio.
• Discounting future cash flows to present value (no net-present-value adjustment).
• Fixed overhead, taxes, or company-wide operating costs beyond gross margin.
• Expansion revenue, upsells, or price changes over the customer's lifetime.
• Cohort-level variation, changing retention curves, or seasonality.

Businesses with materially changing retention, expansion revenue, or purchase behavior over time are often better served by a cohort-based or predictive CLV model rather than this simplified, stable-assumption estimate.

Worked subscription example

Consider a subscription business with:

• Average revenue per customer (R) = $250 per month
• Gross margin (GM) = 80%
• Monthly churn rate (C) = 4%
• Current active customers (N) = 500

Expected lifespan = 1 ÷ 0.04 = 25 months (≈ 2.083333 years)
Revenue CLV = $250 ÷ 0.04 = $6,250
Gross-profit CLV = ($250 × 0.80) ÷ 0.04 = $5,000
Gross profit per month = $250 × 0.80 = $200

With 500 active customers: estimated portfolio revenue value = $6,250 × 500 = $3,125,000, and estimated portfolio gross-profit value = $5,000 × 500 = $2,500,000.

Worked transactional example

Consider a transactional business with:

• Average order value (AOV) = $120
• Purchase frequency (F) = 3 purchases per year
• Average customer lifespan (L) = 4 years
• Gross margin (GM) = 45%
• Current active customers (N) = 1,000

Annual revenue per customer = $120 × 3 = $360
Revenue CLV = $120 × 3 × 4 = $1,440
Annual gross profit per customer = $120 × 3 × 0.45 = $162
Gross-profit CLV = $120 × 3 × 4 × 0.45 = $648
Estimated lifetime purchases = 3 × 4 = 12

With 1,000 active customers: estimated portfolio revenue value = $1,440 × 1,000 = $1,440,000, and estimated portfolio gross-profit value = $648 × 1,000 = $648,000.

Common mistakes

• Mismatched time periods: entering monthly revenue alongside quarterly or annual churn (or vice versa) silently produces a meaningless result.
• Treating revenue CLV as the bottom line: revenue CLV ignores the cost of serving the customer; gross-profit CLV is the more decision-useful figure for most planning purposes.
• Assuming churn or margin never changes: both formulas assume stable churn, margin, revenue, or purchase behavior for the customer's entire lifetime, which rarely holds exactly true in practice.
• Applying a subscription churn rate to a transactional business (or vice versa): the two models use different inputs and different math; mixing them produces a number that does not correspond to either business model.
• Confusing gross-profit CLV with net profit: gross-profit CLV nets out the cost of delivering the product or service, but not acquisition cost, overhead, or taxes — see "What this calculator does not include" above.

How CLV connects to customer acquisition cost

Customer lifetime value and customer acquisition cost are companion metrics: CLV estimates what a customer is worth, while Customer Acquisition Cost estimates what it costs to win one. Comparing the two, typically as an LTV:CAC ratio together with a CAC payback period, is a distinct analysis with its own assumptions and is not calculated on this page. This calculator focuses only on estimating CLV itself. For that comparison, see the LTV:CAC Ratio Calculator and the LTV:CAC Ratio Explained guide.