Customer Lifetime Value Calculator
Turn average sale, repeat rate, and retention into the lifetime value of a single customer — the number that tells you how much you can spend to win one. Your own inputs, no assumptions.
What one customer is really worth.
A customer isn't one sale — it's every sale they'll ever make. This is the number that tells you how much you can spend to win one.
The Customer Lifetime Value (CLV) is calculated as: CLV = (Average Sale) × (Repeat Rate) × (Average Retention Period). The Average Sale is the mean revenue per transaction, derived from total sales over a period divided by the number of transactions. The Repeat Rate is the fraction of customers who make more than one purchase, expressed as a decimal (e.g., 0.40 for 40% repeat buyers). The Average Retention Period is the average number of years (or months, consistent with the sale period) a customer continues purchasing, computed as 1 / (1 - Retention Rate), where Retention Rate is the probability a customer remains active from one period to the next. This formula works because CLV aggregates the expected revenue from a customer over their entire relationship with the business. It is calculated this way to avoid assumptions about discount rates or complex cohort models, focusing on observable inputs: how much they spend, how often they repeat, and how long they stay. Mathematically, it assumes a constant repeat rate and retention, providing a steady-state estimate of customer worth.
Coffee Shop Subscription
A coffee shop has an average sale of $5.50 per visit. Their repeat rate is 0.60 (60% of customers return). They track retention monthly: 80% of customers who bought in one month buy again the next month. So retention rate = 0.80, average retention period = 1 / (1 - 0.80) = 5 months. CLV = $5.50 × 0.60 × 5 = $16.50. This means a typical loyal customer is worth $16.50 in revenue over their relationship.
Online Clothing Retailer
An online store has an average sale of $45.00 per order. Their repeat rate is 0.35 (35% of customers order again). They track retention annually: 50% of customers who bought one year buy again the next year. So retention rate = 0.50, average retention period = 1 / (1 - 0.50) = 2 years. CLV = $45.00 × 0.35 × 2 = $31.50. This indicates that a repeat customer generates $31.50 in revenue over their lifetime.
Gym Membership
A gym has an average monthly sale of $60.00 (membership fee). Their repeat rate is 0.90 (90% of members renew at least once). Retention rate is monthly: 95% of members stay each month. Average retention period = 1 / (1 - 0.95) = 20 months. CLV = $60.00 × 0.90 × 20 = $1,080.00. This shows a long-term member is worth over $1,000 in revenue.
A 'good' CLV depends entirely on your business model and margins. For low-margin, high-repeat businesses (e.g., subscription services), CLV may be hundreds or thousands of dollars. For high-margin, low-repeat businesses (e.g., luxury goods), CLV might be a few hundred. The key principle is that CLV should exceed your customer acquisition cost (CAC) by at least 3x to ensure sustainable growth. If CLV is less than CAC, you lose money on each customer. Ranges: For e-commerce, CLV often falls between $50 and $500. For SaaS, it can be $1,000 to $10,000+. For local services, $100 to $1,000 is common. Interpret CLV as a ceiling for marketing spend per customer—not a guarantee. It assumes repeat patterns hold, so monitor it over time and adjust for changes in retention or sale size. A declining CLV signals issues like customer churn or lower spending, while rising CLV indicates successful retention strategies.
A common mistake is confusing average sale with average order value per customer—use total revenue divided by total transactions, not per-customer averages. Another error is using a repeat rate that includes one-time buyers; ensure the rate reflects customers who actually repurchase. Edge cases: New businesses with short histories may have unreliable retention rates; use monthly cohorts or industry proxies. Also, failing to align time periods—if average sale is monthly, retention must be monthly too. People often forget that CLV is an average—it hides variation between high and low spenders. Finally, assuming retention is constant forever; in reality, retention often decays over time, so this formula gives an optimistic estimate for long-lived customers.
- Average Sale
- The mean revenue generated per transaction, calculated as total sales divided by total number of purchase transactions.
- Repeat Rate
- The proportion of customers who make more than one purchase, indicating the likelihood of a second transaction.
- Retention Rate
- The percentage of customers who continue to purchase from one period to the next, a measure of customer loyalty.
- Customer Acquisition Cost (CAC)
- The total cost of acquiring a new customer, including marketing and sales expenses, used to compare with CLV for profitability.
- Churn Rate
- The percentage of customers who stop purchasing in a given period, calculated as 1 minus the retention rate.
What if my business has no repeat customers?
If your repeat rate is zero, CLV equals your average sale, meaning customers only buy once. You should focus on increasing repeat rate or raising average sale.
How often should I recalculate CLV?
Recalculate at least quarterly or whenever there's a significant change in pricing, retention, or sales patterns to keep your estimates accurate.
Can I use this formula for a subscription business?
Yes, but treat average sale as the recurring fee per period and ensure retention rate matches that same period (e.g., monthly).
Does CLV include profit or just revenue?
This calculator uses revenue only. To get profit-based CLV, multiply by your profit margin percentage.
What if my retention rate is very high, like 99%?
A retention rate near 100% leads to a very long average retention period, making CLV extremely high. This may be unrealistic—consider using a maximum period or a decay model.
How do I calculate retention rate if I have no historical data?
Estimate based on industry benchmarks or run a small pilot. Alternatively, use a conservative assumption like 50% for a new business.
Why is repeat rate separate from retention rate?
Repeat rate captures whether customers buy again at all, while retention rate measures how long they stay. Separating them avoids double-counting one-time buyers.
What is a healthy CLV to CAC ratio?
A ratio of 3:1 or higher is generally healthy, meaning CLV is three times what you spend to acquire a customer. Below 1:1 means you're losing money.
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