Free CLV software tool: estimate gross-margin customer lifetime value from average order value, purchase frequency, and customer lifespan.
Cohort projection
What it does
Projects CLV with cohort analysis by modeling churn, expansion, gross margin, and revenue per customer over multiple years.
Why it matters
CLV compared to CAC tells you whether you can afford to acquire customers profitably and how much room you have to invest in retention.
Definition
Customer lifetime value (CLV) is the total gross margin you expect from a customer relationship over its lifetime — not just revenue.
Assumptions
How to interpret your results
If CLV is not several times higher than CAC (depending on your model), revisit pricing, retention, or acquisition efficiency.
How to improve
Pair with CAC
Compare CLV to CAC and payback — that trio is the core of unit economics.
Use segments
Enterprise vs SMB customers often have very different CLV; model them separately.
The CLV Calculator estimates customer lifetime value on a gross-margin basis: average order value multiplied by orders per year, multiplied by the years a customer stays, multiplied by your gross margin percentage. Four inputs, one number — the profit a typical customer contributes over the whole relationship, not just the first invoice.
Why it matters: most small-business decisions quietly assume a customer is worth their first purchase. That assumption makes you underspend on acquisition, underinvest in retention, and treat a loyal repeat buyer the same as a one-off bargain hunter. Knowing that a typical customer is worth, say, $1,800 in margin over three years changes what you will pay for a lead, how hard you fight to keep an account, and which segments deserve your best service.
It is built for owners who need a working number today rather than a data-science project: e-commerce stores, agencies, subscription businesses, trades and services with repeat work, and SaaS founders doing first-pass unit economics. Estimates are fine — a roughly-right CLV beats a precisely-unknown one.
Total revenue over a recent period divided by number of orders. Subscription business? Use annual contract value or average revenue per account instead, and set orders per year to 1.
How often a typical customer buys, and how many years they keep buying. If you do not track lifespan, estimate it from churn: losing about a quarter of customers a year implies roughly a four-year average lifespan.
Revenue minus direct costs (goods, delivery, direct labor), divided by revenue. This is the step most people skip — and the difference between a vanity number and one you can budget against.
Put the CLV next to your customer acquisition cost and your retention effort per account. Then re-run the calculator with better retention or a higher order frequency to see which lever moves lifetime value most.
You have room to grow faster. You can afford to pay more per lead than you currently do, which usually means you can outbid competitors on channels they find too expensive — or invest in slower channels like content that compound.
Growth will burn cash until the economics change. Before spending more on marketing, work the levers inside CLV: raise prices, increase order frequency with follow-up offers, or extend lifespan by fixing the reasons customers leave.
Run the calculator separately per segment — repeat commercial clients versus one-off residential jobs, annual plans versus monthly. The high-CLV segment tells you who your marketing should actually target, and the low one tells you where to stop discounting.
If small changes to the years figure swing your CLV dramatically, retention is your highest-leverage work. Pair this result with your churn rate to see how quickly lifespan is really eroding, and treat every extra month of average retention as directly bankable margin.
Average order $38, but subscribers reorder monthly and stay around two years. At her margin, CLV came out near $300 — which explained why competitors could pay $40 per new customer on ads while she had capped bids at $10 and stalled. She raised the cap for subscription signups only, where the lifetime math supported it.
One-off treatments paid more per visit, but plan customers renewed for years. Running both through the calculator showed a plan customer was worth several times a one-off job in lifetime margin. He retrained his quoting around the annual plan as the default offer and tracked conversion to plans as his key sales metric.
Before hiring an agency for paid acquisition, she used churn-derived lifespan and ARPA to compute CLV per plan tier. The starter tier's CLV barely covered the proposed cost per signup, while the team tier cleared it comfortably — so the campaign brief targeted team-tier buyers, and the starter tier moved to organic channels only.