CLV Calculator

CLV is evaluated from Average Purchase Value, Purchase Frequency and Average Customer Lifespan. The calculation reports Annual Customer Value, Customer Lifetime Value and Gross Profit CLV.

Results

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About the CLV Calculator

CLV is treated here as a quantitative relation between Average Purchase Value, Purchase Frequency, Average Customer Lifespan and Gross Margin% and Annual Customer Value, Customer Lifetime Value, Gross Profit CLV and Max Allowable CAC.

The calculator uses a multi formula configuration. Each reported value is read as a direct evaluation of the stored rules with the declared field formats and units.

Formula basis:
Annual Value = avg purchase x frequency/year
CLV = annual value x lifespan in years
Gross Profit CLV = CLV x gross margin%
Max CAC = gross CLV / 3 (3:1 LTV:CAC target)
LTV:CAC = gross CLV / CAC

Interpret the outputs in the order shown by the result fields. Optional inputs affect only the outputs that depend on those variables.

Formula & How It Works

The calculation applies the following relations exactly as recorded in the metadata:

Annual Value = avg purchase x frequency/year
CLV = annual value x lifespan in years
Gross Profit CLV = CLV x gross margin%
Max CAC = gross CLV / 3 (3:1 LTV:CAC target)
LTV:CAC = gross CLV / CAC

Each output field is produced by substituting the supplied inputs into the relevant relation and then applying the declared rounding or text format.

Worked Examples

Example 1: Coffee shop: $6.50 avg ticket, 3x/week = 156 visits/year, stays customer 5 years

Inputs

avg_purchase_value: 6.5 purchase_frequency: 156 customer_lifespan: 5 gross_margin_pct: 65 current_cac: 15
Annual Customer Value: $1,014/yr. Customer Lifetime Value: $5,070. Gross Profit CLV: $3,296. Max Allowable CAC: $1,099. LTV:CAC Ratio: 219.7 x

With Average Purchase Value = 6.5, Purchase Frequency = 156, Average Customer Lifespan = 5 and Gross Margin% = 65 as the stated inputs, the result is Annual Customer Value = $1,014/yr, Customer Lifetime Value = $5,070 and Gross Profit CLV = $3,296. Each value corresponds to the declared output fields.

Example 2: SaaS company: $299/mo plan, 12 purchases/year, 2.5 year avg lifespan, 75% margin

Inputs

avg_purchase_value: 299 purchase_frequency: 12 customer_lifespan: 2.5 gross_margin_pct: 75 current_cac: 1200
Annual Customer Value: $3,588/yr. Customer Lifetime Value: $8,970. Gross Profit CLV: $6,728. Max Allowable CAC: $2,243. LTV:CAC Ratio: 5.61 x

With Average Purchase Value = 299, Purchase Frequency = 12, Average Customer Lifespan = 2.5 and Gross Margin% = 75 as the stated inputs, the result is Annual Customer Value = $3,588/yr, Customer Lifetime Value = $8,970 and Gross Profit CLV = $6,728. Each value corresponds to the declared output fields.

Example 3: Auto dealership: $42,000 avg car sale, purchases every 4 years, 2 cars per family over 8 years, 8% margin

Inputs

avg_purchase_value: 42000 purchase_frequency: 0.5 customer_lifespan: 8 gross_margin_pct: 8 current_cac: 500
Annual Customer Value: $21,000/yr. Customer Lifetime Value: $168,000. Gross Profit CLV: $13,440. Max Allowable CAC: $4,480. LTV:CAC Ratio: 26.88 x

With Average Purchase Value = 42,000, Purchase Frequency = 0.5, Average Customer Lifespan = 8 and Gross Margin% = 8 as the stated inputs, the result is Annual Customer Value = $21,000/yr, Customer Lifetime Value = $168,000 and Gross Profit CLV = $13,440. Each value corresponds to the declared output fields.

Example 4: E-commerce subscription box: $45/month box, 6 orders/year, 14-month avg retention, 55% margin

Inputs

avg_purchase_value: 45 purchase_frequency: 6 customer_lifespan: 1.17 gross_margin_pct: 55 current_cac: 35
Annual Customer Value: $270/yr. Customer Lifetime Value: $316. Gross Profit CLV: $174. Max Allowable CAC: $58. LTV:CAC Ratio: 4.96 x

With Average Purchase Value = 45, Purchase Frequency = 6, Average Customer Lifespan = 1.17 and Gross Margin% = 55 as the stated inputs, the result is Annual Customer Value = $270/yr, Customer Lifetime Value = $316 and Gross Profit CLV = $174. Each value corresponds to the declared output fields.

Common Use Cases

  • Calculate customer lifetime value for marketing budget decisions
  • Determine maximum allowable customer acquisition cost
  • Compare CLV across customer segments