Customer Lifetime Value Calculator

Customer Lifetime Value (CLV) is the total revenue a business can expect from a single customer throughout their relationship. It helps you understand how much you can afford to spend acquiring customers. Higher CLV means you can invest more in marketing while remaining profitable.

A CLV to CAC ratio of 3:1 or higher is considered healthy. This means your customer lifetime value is at least 3 times your customer acquisition cost. Ratios below 3:1 suggest you're spending too much to acquire customers. Ratios above 5:1 may indicate you're under-investing in growth.

Increase CLV by: 1) Improving customer retention (reduce churn), 2) Increasing average order value through upsells, 3) Encouraging repeat purchases with loyalty programs, 4) Extending customer lifespan with excellent support, 5) Raising prices as you add value.

A payback period under 12 months is generally considered good for most businesses. SaaS companies typically aim for 6-12 months. E-commerce should recover acquisition costs within the first purchase or two. Shorter payback periods mean faster cash flow and less risk.

Churn rate = (Customers lost ÷ Total customers at start of period) × 100. For example, if you start with 100 customers and lose 5, your churn rate is 5%. Annual churn of 5-7% is excellent for SaaS. Monthly churn under 2% is considered good.