CLV Calculator
Estimate customer lifetime value under three honest models
Each model states its assumptions explicitly — the tool never hides which formula produced the number.
Enter as a decimal: 0.04 = 4% of customers lost per period.
Feeds the CAC payback estimate; leave at 0 if unknown.
What this result means
Adjust the inputs above to see the analysis.
How this is calculated
Gross margin is clamped to the 0–100% range before it is applied. The subscription model refuses to invent a lifespan when churn is zero — a lifetime sum with no churn never converges, so the tool returns zero and says why instead of printing infinity.
- The CLV:CAC ratio is healthy at 3:1 or better; below 1:1 the business spends more to win a customer than the customer returns.
- All periods must be consistent: if revenue is monthly, churn and lifespan must be monthly too.
Numbers you can check
$80 revenue per month at 80% margin with 4% monthly churn and a 1% discount: margin per month $64 ÷ 0.05 = $1,280 CLV, expected lifespan 25 months.
How Customer Lifetime Value Works
Customer lifetime value answers one question with money: what is a customer worth over the whole relationship, not just the first order? The honest answer depends on the business model, which is why this calculator offers three explicit formulas instead of one magic number. Pick the model that matches how revenue actually arrives, feed it real inputs, and the result is defensible in a board meeting or a loan application.
The subscription model treats each period's gross margin as an annuity. Customers leave at a steady churn rate, so the expected lifespan is one divided by churn, and the present value of that stream is margin per period divided by churn plus a discount rate. A 4% monthly churn implies a 25-month relationship; a 10% churn implies ten months. That sensitivity is the point — churn dominates every other lever in subscription economics.
The repeat-purchase model suits retail and ecommerce: average order value times purchases per period times margin, repeated over the lifespan. The simple-margin model drops the frequency term when frequency data is thin, counting the lifespan as a purchase count instead.
Why gross margin, not revenue
Lifetime value built on revenue overstates what the business keeps. Cost of goods, payment fees, support and refunds all sit between revenue and the cash that can fund the next acquisition. Multiplying by gross margin keeps the number honest; multiplying revenue by an arbitrary 3× is how marketing decks invent value.
CAC payback closes the loop
A CLV figure without an acquisition cost is half an answer. Payback months divide the acquisition cost by the monthly contribution a customer generates. Under twelve months is a comfortable benchmark for most software businesses; the CLV:CAC ratio of three to one or better is the classic health check that pairs with it.
Written by Finance Experts · Last updated October 2026
Frequently Asked Questions
What is a good CLV to CAC ratio?
Three to one or better is the common benchmark. Below one to one you lose money on every acquisition; between one and three you are growing but under-investing in retention or over-paying for traffic.
Should CLV use revenue or profit?
Gross profit. Revenue-based CLV overstates value because it ignores cost of goods, fees and support. This calculator multiplies by your gross margin before extending value over the lifespan.
Why does zero churn break the subscription formula?
With no churn the customer never leaves, so the sum of future margin never converges to a finite number. The calculator refuses to print infinity and asks for an expected churn rate instead.
How do I estimate churn rate?
Divide customers lost in a period by customers at the start of that period. Use the same period as your revenue input — monthly revenue needs monthly churn, annual revenue needs annual churn.
What CAC payback period is healthy?
Twelve months or less suits most subscription businesses. Longer payback is workable for durable, high-margin products, but it raises the funding needed to keep buying customers at the same pace.
How often should I recalculate CLV?
Quarterly, and immediately after pricing changes, major cost shifts or a measurable change in churn. Lifetime value is a moving estimate, not a fixed asset on the balance sheet.
Related Tools
CLV Benchmarks and CAC Ratios
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Churn, margin and frequency drift with cohorts and pricing changes; re-run the model when those inputs move.
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