# What is my customer lifetime value?

Computes customer lifetime value (CLV): the yearly profit from one customer × the years they stay − the cost to acquire them, from order value, orders a year and profit margin or from a yearly profit.

- Page: https://www.acalculator.org/finance/customer-lifetime-value-calculator
- JSON spec: https://www.acalculator.org/finance/customer-lifetime-value-calculator.json
- Version: 0cf3e462cf0b

## Default answer

Example with the default inputs (I know the Orders and margin, Average order value $50.00, Orders per year 6, Profit margin 40%, Years as a customer 3, Acquisition cost $40.00): A customer who brings $120.00 of profit a year for 3 years, less $40.00 to acquire, has a lifetime value of $320.00.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| from | I know the | Whether you know the order value, orders a year and margin, or the yearly profit per customer. |
| aov | Average order value | What a customer spends per order, on average. |
| orders | Orders per year | How many orders one customer places in a year, on average. |
| margin | Profit margin | The share of each sale left after the cost of the goods sold (the gross margin). |
| profit | Profit per customer per year | The profit one customer brings in a year, after the cost of the goods sold. |
| years | Years as a customer | How many years a customer keeps buying, on average. |
| cac | Acquisition cost | What it costs to win one new customer (CAC). Enter 0 to leave it out. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| clv | Customer lifetime value | Profit per customer per year × years as a customer − acquisition cost. |
| annualProfit | Profit per customer per year | Revenue per customer per year × profit margin, or as typed. |
| lifetimeProfit | Lifetime profit before acquisition cost | Profit per customer per year × years. |
| revenue | Revenue per customer per year | Average order value × orders per year. |
| lifetimeRevenue | Lifetime revenue per customer | Revenue per customer per year × years. |

## Method

CLV = profit per customer per year × years as a customer − acquisition cost; from orders, profit per year = average order value × orders per year × profit margin ÷ 100.

## Assumptions

- Profit is after the cost of the goods sold; other costs, such as overheads, are not taken off.
- Future profit is not discounted: a dollar in a later year counts the same as a dollar today.
- Arithmetic is exact on the typed decimals; money shows to the cent, halves up.

## Worked examples

1. from = profit, profit = $10,000.00, years = 12, cac = $750.00 gives clv = $119,250.00, lifetimeProfit = $120,000.00. Source: OpenStax, Principles of Marketing, 2.4 Marketing Plan Progress Using Metrics, Table 2.1 (CLV = annual profit per customer × average number of years retained − customer acquisition cost). https://openstax.org/books/principles-marketing/pages/2-4-marketing-plan-progress-using-metrics: (10,000 × 12) − 750 = 119,250.
2. from = profit, profit = $22,000.00, years = 8, cac = $1,200.00 gives clv = $174,800.00. Source: OpenStax, Principles of Marketing, 2.4 Marketing Plan Progress Using Metrics, Table 2.1 (CLV = annual profit per customer × average number of years retained − customer acquisition cost). https://openstax.org/books/principles-marketing/pages/2-4-marketing-plan-progress-using-metrics: (22,000 × 8) − 1,200 = 174,800.
3. from = profit, profit = $34,000.00, years = 8, cac = $1,600.00 gives clv = $270,400.00. Source: OpenStax, Principles of Marketing, 2.4 Marketing Plan Progress Using Metrics, Table 2.1 (CLV = annual profit per customer × average number of years retained − customer acquisition cost). https://openstax.org/books/principles-marketing/pages/2-4-marketing-plan-progress-using-metrics: (34,000 × 8) − 1,600 = 270,400.
4. from = orders, aov = $50.00, orders = 6, margin = 40%, years = 3, cac = $40.00 gives revenue = $300.00, annualProfit = $120.00, lifetimeRevenue = $900.00, lifetimeProfit = $360.00, clv = $320.00. Source: OpenStax, Principles of Marketing, 2.4 Marketing Plan Progress Using Metrics, Table 2.1 (CLV = annual profit per customer × average number of years retained − customer acquisition cost). https://openstax.org/books/principles-marketing/pages/2-4-marketing-plan-progress-using-metrics.
5. from = orders, aov = $20.00, orders = 2, margin = 25%, years = 1, cac = $30.00 gives annualProfit = $10.00, clv = -$20.00. Source: OpenStax, Principles of Marketing, 2.4 Marketing Plan Progress Using Metrics, Table 2.1 (CLV = annual profit per customer × average number of years retained − customer acquisition cost). https://openstax.org/books/principles-marketing/pages/2-4-marketing-plan-progress-using-metrics.

## FAQ

### What is customer lifetime value?

Customer lifetime value (CLV) is an estimate of how much one customer is worth to a business over all the years they keep buying. It looks ahead, so it is an estimate, not a promise.

### How do I calculate customer lifetime value?

Multiply the yearly profit from one customer by the number of years they stay, then subtract what it cost to win them. A customer who brings $10,000 of profit a year for 12 years and cost $750 to win has a CLV of 10,000 × 12 − 750 = $119,250.

### How do I find the yearly profit per customer?

Multiply the average order value by the orders a customer places in a year to get their yearly revenue, then multiply by your profit margin. $50 orders, 6 times a year, at a 40% margin is 50 × 6 × 0.40 = $120 of profit a year.

### Should I use revenue or profit?

Profit gives the truer value, because revenue still has to pay for the goods you sell. The page shows both: the lifetime revenue per customer and the lifetime value from profit. To see a value based on revenue alone, set the margin to 100%.

### How do I estimate how long a customer stays?

Use the average number of years your customers keep buying. If the same share of customers leaves every year, they stay 1 ÷ that share years on average: with 25% leaving each year, that is 1 ÷ 0.25 = 4 years.

### Why take off the acquisition cost?

Winning a customer costs money: ads, sales time and offers. Taking that cost off shows what the customer is worth after you paid to win them. A customer whose lifetime profit is less than the acquisition cost has a negative CLV.

### How can I raise customer lifetime value?

Keep customers longer, get them to order more often or spend more per order, raise your margin, or win them for less. Each of these moves the value directly: doubling the years a customer stays doubles the lifetime profit.

## Sources

- OpenStax, Principles of Marketing, 2.4 Marketing Plan Progress Using Metrics: CLV = (annual profit per customer × average number of years retained) − customer acquisition cost, with Table 2.1. https://openstax.org/books/principles-marketing/pages/2-4-marketing-plan-progress-using-metrics (retrieved 2026-10-18)