Customer Lifetime Value Calculator — LTV
Calculate customer lifetime value from average purchase, frequency, and retention rate. Free CLV calculator for small businesses to measure customer profitability.
Inputs
Enter the minimum numbers needed to get a result.
Formula and example
Average Lifespan = 1 / (1 - Retention Rate); LTV = Avg Purchase × Frequency × Lifespan; Profit = LTV - (Cost Per Customer × Lifespan)
If average purchase is $50, customers buy 12x/year, 70% retention rate, and each costs $30/year: lifespan = 3.3 years, LTV = $2,000, profit per customer = $1,900.
Methodology & assumptions
Last updated: 2026-06-13Calculation method
Uses the standard CLV formula with churn rate (1 - retention rate) to estimate customer lifespan. Assumes constant purchasing behavior over the customer relationship. More sophisticated CLV models include discount rates and variable margins.
Data sources
Uses the numbers you enter and standard small-business finance formulas. Benchmark comparisons use HustleFin industry benchmark pages where available.
Limitations
For planning estimates only. Assumes constant purchase behavior and retention rate. Does not account for discount rates, customer acquisition costs, or changes in pricing over time. Use cohort analysis for more accurate CLV tracking.
Input definitions
- Average purchase value: Average amount a customer spends per transaction.
- Purchase frequency per year: How many times a customer buys per year.
- Annual retention rate: Percentage of customers who remain active each year.
- Annual cost per customer: Annual cost to serve one customer (support, shipping, etc.).
Frequently asked questions
What is a good customer lifetime value?+
A healthy CLV is at least 3x your customer acquisition cost (CAC). If it costs $500 to acquire a customer, you want them to generate at least $1,500 in profit over their lifetime.
How do I increase customer lifetime value?+
Three levers: increase average purchase value (upsells, bundles), increase purchase frequency (email marketing, loyalty programs), and improve retention rate (better service, onboarding).
What is the difference between LTV and CLV?+
They're the same concept. LTV (lifetime value) and CLV (customer lifetime value) are used interchangeably. Some models include the time value of money (discounted CLV), while others use simple total revenue.
How does retention rate affect CLV?+
Retention rate is the most powerful CLV lever. A 5% increase in retention can increase CLV by 25-50% because customers stay longer and their revenue compounds with repeat purchases.
Related guides
Go deeper with in-depth guides on the concepts behind this calculator.
Continue the workflow
Estimate margin, convert margin to markup, then check the sales volume needed to break even.