Business

Customer Lifetime Value Calculator

Estimate the total revenue a typical customer brings over their whole relationship with a business.

The result is the estimated total revenue from a typical customer over their whole lifetime with the business, shown per customer in dollars.

Formula

Lifetime value = average purchase value multiplied by purchases per year multiplied by average customer lifetime in years.

How it works

Multiply what a typical customer spends per order by how often they buy each year and how many years they usually stay. This rough figure shows how much a customer is worth, which guides how much can sensibly be spent to win one.

Worked example

For example, an average purchase value of $80 multiplied by 6 purchases per year and an average customer lifetime of 3 years gives a lifetime value of $1,440 per customer.

FAQs

Is this revenue or profit?
This version is revenue. For profit, multiply by your gross margin percentage as a follow-up step.

What if customers buy irregularly?
Use long-run averages across many customers rather than one unusually loyal buyer.

Why does lifetime value matter?
It sets the ceiling for acquisition spending and shows why keeping customers can beat constantly finding new ones.

Estimates only, not financial advice. Check your figures before making a business decision.

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