REVENUE · LIFETIME VALUE
Customer Lifetime Value Calculator
Calculate CLV, CLV:CAC ratio, and acquisition payback from purchase patterns.
Result
CLV to net payback
Revenue CLV gets trimmed by gross margin, then CAC shows what remains after acquisition.
How to use it
- Enter average purchase value, purchase frequency per year, customer lifespan in years, acquisition cost, and gross margin. Use cohort averages rather than your best customers so the result reflects the typical customer you are paying to acquire.
- Read revenue CLV, annual value, monthly value, margin-adjusted CLV, CLV:CAC ratio, and CAC payback months. A CLV:CAC ratio of 3:1 or higher is generally healthy, and payback under 12 months usually indicates efficient acquisition spend.
- Base decisions on margin-adjusted CLV, not revenue CLV. If gross margin is only 40-50%, the profit value of a customer can be dramatically lower than the revenue number suggests, which changes how much CAC you can safely tolerate.
- Use the result to set CAC limits, segment high-value customers, and justify retention work. Increasing purchase frequency from 3 to 4 times per year or lifespan from 2 to 3 years often improves CLV more cheaply than chasing more top-of-funnel traffic.
- Re-run monthly or by cohort whenever pricing, repeat rate, margin, or CAC shifts. Track margin-adjusted CLV and payback by channel because blended averages can hide an unprofitable acquisition source.
Questions people usually ask
What is Customer Lifetime Value (CLV)?
CLV is the total revenue a business can expect from a single customer over their entire relationship. It's calculated as average purchase value × purchase frequency × customer lifespan.
What is a good CLV:CAC ratio?
A 3:1 ratio is generally considered healthy — you earn 3× what you spend to acquire each customer. Below 1:1 means you're losing money on acquisition. Above 5:1 may indicate under-investment in growth.
Why use margin-adjusted CLV instead of revenue CLV?
Revenue CLV overstates value because it ignores cost of goods sold. Margin-adjusted CLV reflects actual profit and gives a more accurate picture of what each customer is truly worth.
Is this tool free and private to use?
Yes. AI Biz Hub tools are free, no-signup browser tools. Inputs stay in your browser unless you choose to share a URL.
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