Customer Lifetime Value Calculator
What a customer is really worth over time.
How the customer lifetime value calculator works
Customer lifetime value is what turns acquisition from a cost into an investment. If you know a customer is worth $350 in margin over three years, you know how much you can afford to spend to acquire one.
Enter your average order value, how often a customer buys per year, how long they stay, and your gross margin. The calculator returns a margin-adjusted lifetime value, not just gross revenue, so it reflects real profit.
The highest-leverage input is usually retention. Extending customer lifespan or purchase frequency compounds, because every additional order carries your full margin with almost no new acquisition cost.
The formula
How this is calculated
Lifetime value is the margin-adjusted revenue a customer produces across their lifespan: order value times purchase frequency times years, multiplied by gross margin.
Worked example
$65 AOV, 3 orders a year for 3 years at 60% margin is about $351 in lifetime value.
Frequently asked questions
Should CLV use revenue or margin?
Margin. Gross-revenue CLV overstates what a customer is worth and leads to overspending on acquisition. Margin-adjusted CLV is the figure to compare against your cost to acquire a customer.
How does CLV guide ad spend?
Your allowable cost per acquisition should stay comfortably below your margin CLV. Many stores target acquiring customers for a fraction of their lifetime value to fund overhead and growth.
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