Customer Lifetime Value Calculator

CLV: —

How is customer lifetime value (LTV) calculated?

Customer Lifetime Value (CLV or LTV) is calculated by multiplying the average purchase value, purchase frequency, and customer lifespan.

This is the LTV formula: LTV = Average Purchase Value × Purchase Frequency × Customer Lifespan

For example:

  • Average Purchase Value: $50
  • Average Purchase Frequency: 4 purchases per year
  • Average Customer Lifespan: 3 years

CLV = $50 × 4 × 3 = $600

This means, on average, each customer is worth $600 over their entire relationship with your business.

Some businesses also subtract customer acquisition cost (CAC) to get Net LTV, which gives a more accurate picture of profitability.