What is a good CLV:CAC ratio?

A CLV:CAC ratio of 3:1 is considered healthy—you get $3 in lifetime value for every $1 spent acquiring a customer. Ratios above 5:1 suggest you may be under-investing in growth. Below 1:1 means you're losing money on customer acquisition.

What is the difference between CLV and LTV?

CLV (Customer Lifetime Value) and LTV (Lifetime Value) are the same metric—different companies use different abbreviations. Both measure the total revenue or profit expected from a customer over their relationship with your business.

How do you calculate CLV for SaaS?

For SaaS: CLV = (Monthly Revenue × Gross Margin) ÷ Monthly Churn Rate. If ARPU is $100/mo, margin is 80%, and monthly churn is 4%, then CLV = ($100 × 0.80) ÷ 0.04 = $2,000. This assumes no expansion revenue—add it for more accurate results.

What is the average customer lifetime value?

CLV varies widely by industry. SaaS Enterprise: $5,000-$50,000+. SaaS SMB: $500-$3,000. E-commerce Fashion: $100-$500. Subscription Box: $100-$300. Telecom: $1,000-$3,000. Use our calculator to compare against your industry benchmark.

How does churn affect CLV?

Churn dramatically impacts CLV. Reducing monthly churn from 5% to 4% increases customer lifetime from 20 to 25 months—a 25% CLV improvement. Small churn reductions compound into large lifetime value gains. Use our improvement scenarios to model this.

What is CAC payback period?

CAC payback period is the time needed to recover customer acquisition cost through gross profit. Calculate it as CAC ÷ (Monthly Revenue × Gross Margin). A payback under 12 months is considered healthy; under 6 months is excellent.

How do you increase customer lifetime value?

Key strategies: (1) Reduce churn through better onboarding and support, (2) Increase purchase frequency with email and loyalty programs, (3) Raise AOV through upsells and bundles, (4) Extend lifespan with subscription models, (5) Improve margins through operational efficiency.

Should CLV include gross margin?

For most business decisions, yes—use CLV based on gross profit, not revenue. Revenue-based CLV overstates what you actually earn. Gross profit CLV better represents the money available for marketing, overhead, and profit. Our E-commerce and SaaS modes include margin.

How do you calculate CLV for e-commerce?

E-commerce CLV = Average Order Value × Purchase Frequency × Customer Lifespan × Gross Margin. Example: $75 AOV × 3 orders/year × 2 years × 40% margin = $180 CLV. Track these metrics in your analytics to calculate accurate CLV.

Business

Customer Lifetime Value Calculator

Calculate Customer Lifetime Value (CLV) for e-commerce, SaaS, and subscription businesses. Includes CLV:CAC ratio, payback period, industry benchmarks, and improvement scenarios.

Quick Start Scenarios

Calculation Settings

Calculation Mode

Industry Benchmark

Customer Value Metrics

Average Order Value (AOV)*

Purchase Frequency*

per year

Customer Lifespan*

years

Unit Economics (Optional)

Customer Acquisition Cost (CAC)

Enter CAC to calculate CLV:CAC ratio and payback period

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How to Calculate Customer Lifetime Value

Customer Lifetime Value (CLV or LTV) is the total revenue you can expect from a single customer throughout their entire relationship with your business. Our free CLV calculator works for e-commerce, SaaS, and subscription businesses. Calculate your CLV, CLV:CAC ratio, payback period, and see how you compare to industry benchmarks.

What Is Customer Lifetime Value?

Customer Lifetime Value measures the total profit a customer generates over their lifetime with your business. For e-commerce, it's based on average order value, purchase frequency, and customer lifespan. For SaaS, it's calculated from monthly revenue and churn rate. CLV helps you understand how much you can profitably spend to acquire a customer.

CLV Formulas

Simple: CLV = AOV × Frequency × Lifespan | SaaS: CLV = (ARPU × Margin) ÷ Churn Rate

Why Calculate CLV?

Set CAC Budgets

Know how much you can spend to acquire customers profitably. A healthy CLV:CAC ratio is 3:1 or higher.

Identify Best Customers

Segment customers by CLV to focus on acquiring and retaining your most valuable segments.

Justify Retention Spend

Show the ROI of customer success and retention programs with concrete lifetime value numbers.

Forecast Revenue

Project future revenue based on your customer base size and average CLV.

Optimize Pricing

Test pricing changes and measure their impact on customer lifetime value.

Investor Reporting

CLV and CLV:CAC are key metrics VCs evaluate when assessing unit economics.

How to Use the CLV Calculator

Common Use Cases

E-commerce CLV

Calculate lifetime value for online stores using average order value, purchase frequency, and customer lifespan.

SaaS Subscription CLV

Determine subscriber value using monthly revenue, gross margin, and churn rate.

Marketing Budget Planning

Set customer acquisition budgets based on CLV:CAC ratios by channel.

Investor Due Diligence

Prepare unit economics for fundraising with CLV, CAC, and payback metrics.

Customer Segmentation

Compare CLV across customer segments to prioritize high-value cohorts.

Retention ROI Analysis

Calculate how retention improvements impact lifetime value.

Frequently Asked Questions

The basic formula is CLV = Average Order Value × Purchase Frequency × Customer Lifespan. For e-commerce, multiply by gross margin. For SaaS: CLV = (ARPU × Gross Margin) ÷ Monthly Churn Rate. Our calculator handles all these formulas automatically based on your business type.

How to Calculate Customer Lifetime Value

What Is Customer Lifetime Value?

CLV Formulas

Simple: CLV = AOV × Frequency × Lifespan | SaaS: CLV = (ARPU × Margin) ÷ Churn Rate