Quick answer
How do you calculate Customer Lifetime Value?
Use Customer lifetime value = Average order value × Purchase frequency × Customer lifespan. Enter the matching values above to calculate the result instantly.
What it measures
Understanding Customer Lifetime Value
Estimate customer lifetime revenue from order value, purchase frequency, and lifespan. Revenue LTV is useful for a quick view, while contribution-margin LTV is stronger for acquisition and profitability decisions.
Interpretation
What the result means
The result estimates total revenue from an average customer across the assumed relationship length.
Action
How to use it
Build cohort-specific values, apply gross margin, and compare the result with CAC and payback period.
Limits
What it leaves out
The simple model assumes stable behavior and ignores retention curves, discounting, support costs, and customer variation.
The math
Customer Lifetime Value formula
Worked example
Example calculation
- Calculation
- $65 × 4 × 3
- Result
- $780 lifetime revenue
Step by step
How to use this calculator
- 1Enter average order value, purchases per year, customer lifespan.
- 2Keep every input on the same time period and measurement basis.
- 3Review the result, then change one assumption at a time to test scenarios.
Decision support
When this calculator is useful
- Acquisition budgeting
- Retention planning
- Customer segmentation
Common questions
Frequently asked questions
Which inputs should I use for Customer Lifetime Value?
Use average order value, purchases per year, customer lifespan, measured from the same source and period. Include only values that match the definitions shown beside each field.
Why might two Customer Lifetime Value calculations differ?
The systems or accounting policies may define average order value, purchases per year, customer lifespan differently. Compare the time period, scope, source, and treatment of exceptional items before comparing results.
How often should I recalculate Customer Lifetime Value?
Recalculate when any input changes materially and on the same reporting cadence used for the decision. Save the source and date of each input so the trend remains comparable.
Can I use Customer Lifetime Value by itself?
No single metric captures the full decision. Use the result with the related measures, assumptions, and limitations shown on this page.
Calculation reviewed: 2026-06-18. CalcPilot uses the formula shown above and tests representative values during the production build. See our methodology and correction policy.
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