How do you calculate customer lifetime value?

Simple CLV = average order value × purchases per year × customer lifespan in years. Multiply by gross margin to get profit CLV.

What is a good CLV to CAC ratio?

3:1 is the commonly cited rule of thumb. Below 1:1 each customer loses money; between 1:1 and 3:1 margins are thin; well above 5:1 you could probably spend more to grow faster.

Should CLV use revenue or profit?

Use profit when comparing with acquisition cost. Revenue CLV overstates what you can afford to spend to win a customer.

How can I increase CLV?

Raise average order value with bundles and upsells, increase purchase frequency with email and loyalty offers, and keep customers longer with better service and onboarding.

CLV Calculator · Calculators

Customer Lifetime Value (CLV) Calculator

Estimate what a customer is worth over time and check your CLV:CAC ratio.

100% free
No sign-up
Runs in your browser

Your customers

Average order value

Purchases per year

/yr

Average orders one customer places in a year.

Customer lifespan

yrs

How long a typical customer keeps buying from you.

Gross margin

Customer acquisition cost (CAC)

Marketing + sales spend ÷ new customers won. Optional.

Result

Lifetime value (revenue)

$30,000

12 orders over the lifespan

Lifetime value (profit)

$12,000

Revenue CLV × gross margin

CLV : CAC

4 : 1

Profit CLV ÷ CAC

Profit after CAC

$9,000

Max CAC for a 3:1 ratio

$4,000

What you could spend to win a customer and stay at the rule of thumb

CLV : CAC ratio

1:13:15:1

Around 3:1+

A healthy balance by the common 3:1 rule of thumb: customers are worth several times what you pay to acquire them.

CLV = AOV × purchases per year × lifespan (years); profit CLV applies your gross margin. This is a simple, undiscounted estimate. 3:1 is a widely used rule of thumb, not a law. Calculated in your browser; nothing is stored.

How it works

How to use CLV Calculator

Enter average order value, purchases per year and how many years a customer stays.

Add your gross margin to turn revenue into profit per customer.

Enter your customer acquisition cost to see your CLV:CAC ratio and verdict.

About

About this tool

Customer lifetime value (CLV or LTV) estimates how much a typical customer spends with you over the whole relationship. The simple version multiplies average order value by purchases per year and by the number of years a customer stays. Apply your gross margin to see the profit a customer brings, which is the figure that matters for marketing budgets.

Comparing profit CLV with customer acquisition cost (CAC) tells you whether growth is sustainable. A widely used rule of thumb is 3:1, meaning each customer is worth about three times what it costs to win them. Below 1:1 you lose money on every new customer; well above 5:1 you may be under-investing in growth.

This is an undiscounted, average-customer estimate, ideal for planning and quick checks. For forecasting, segment customers and use cohort data where you can.

Frequently asked questions

Free proposal

Want better numbers? We run Google and Meta ads that are built around profit, not clicks.

No obligation. A real strategist replies within 24 hours.

Keep going

More free tools

All free tools

CPA CalculatorGet your cost per acquisition and see whether each sale makes money.ROAS CalculatorPopularSee how much revenue every rupee or dollar of ad spend brings back.Conversion Rate CalculatorGet your conversion rate and see what a small lift is worth in revenue.StrategyT3PopularAnswer 6 questions and get a channel mix, budget split, KPIs and a 90-day plan.

Done-for-you

Let's make your ad spend profitable

Free tools show you the problem. The T3 team fixes it, with a clear plan and pricing up front.

See our services Run a free website audit