What this calculator does

Customer lifetime value helps compare acquisition cost with expected gross profit from a customer relationship.

Formula used

Gross lifetime value equals average order value multiplied by purchases per year, customer lifespan and gross margin. Net value subtracts acquisition cost.

How to read the result

CLV is sensitive to retention and margin assumptions. Use conservative inputs and compare cohorts when real data is available.

Assumptions

  • Uses simple average values.
  • Does not discount future cash flow.
  • Does not include support, returns or overhead unless reflected in margin.

Sources and checks

This calculator uses a standard public formula. Where rules or thresholds can change, source links are listed on the relevant page.

Frequently asked questions

Should CLV be higher than acquisition cost?

Usually yes. A business needs lifetime gross profit to cover acquisition cost and leave room for operating costs and profit.