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Customer Lifetime Value Calculator by Selzy

Calculate your customer lifetime value with this free CLV calculator.

Average check

Check out Google Analytics to find this one out.

Average number of orders per month

It’s how many orders a customer makes each month. Check out Google Analytics or any other system you use to find it out.

Average margin

Margin is the difference between cost price and retail price in percentages. For example, if the item’s cost price is $100 and you sell it for $200, the margin is 50%. If you don’t know the margin, use 1% — but you’ll get the average revenue per customer instead of the average profit.

Average customer lifetime (in months)

How much time does your client spend with your business? Read the guide below if you don’t know.

Your LTV is

What is Customer Lifetime Value

Customer Lifetime Value (LTV, also known as CLV) is one of the most important business metrics that shows how much money an average customer spends during their relationship with a brand, from the point of contact to the point of churn.

How to use our customer acquisition cost calculator

Average Purchase Value

Provide the average check per customer for your business. You can get this figure from Google Analytics.

Average number of orders

Include the average number of orders your customers place per month. You can also find this in Google Analytics.

Average profit margins

Enter the margin for your business, which is the percentage difference between the purchase or production price and the retail price of your products. For example, if you spend $3 to make a croissant and sell it for $6, your margin is 50%. You can enter 1% if you haven't calculated your margin yet.

Retention time

Type in the average lifetime of the relationship between a new customer and your brand.

Calculate LTV

The formula used by our LTV calculator

Consider this lifetime value calculator as an easy-to-use automation tool to accurately calculate your CLV divided by channels. And for your convenience, here’s the basic formula for calculating CLV manually:

CLV (LTV) = Average Revenue a Customer Brings to the Company x Customer Lifespan

It shows the average value your customers place on your brand, without specific breakdowns for countries, sales and marketing channels, etc. Keep that in mind when you calculate your revenue for the next month, quarter, or year.

Why is it important to calculate customer lifetime value

It Affects Your Revenue

It may sound obvious, but your overall revenue stream depends on the amount, number, and regularity of each purchase your customers make. The longer they stay with your brand, the more monetary value they bring. Using CLV, you can calculate online in advance the potential revenue you will earn in the future over a given period of time.

It can boost customer loyalty and retention

For your business, CLV means the quality of relationships with your customers. But for your clients, it literally means the quality of your brand. If they stay with you after their first purchase and become repeat buyers, that means your company values really resonate with them — and as a bonus to increasing the average check, you get free advocates for your brand.

It helps you target your perfect customers

How do you determine which acquisition channel is most effective? If your answer is "by the number of leads it brings in," you're wrong! You can get hundreds of new leads who would never buy from you, or who would make a one-time purchase and churn. It's only CLV that shows the true value of each channel by providing a better understanding of the quality of the leads you're getting.

It reduces customer acquisition costs

Customer Acquisition Cost (CAC) helps your business calculate the amount of money spent on attracting a new client. Now, think about what insight you can get from the combination (and correlation!) of CAC and CLTV? Right, it indicates that if your acquisition expenses exceed the average value of a customer, you can't afford that increase of your social media or email marketing budget — and need to reduce your CAC before your business becomes unprofitable.

How to improve your CLV

Onboard, nurture, and educate your leads from day one, and make sure you pay enough attention to retention.

Unless you sell essential goods, your customers need to understand what your business is about, what its values are, why do they need the product or services you sell — and what’s even more important — why do they need to buy it specifically from you on a regular basis.

For your business to prosper, It’s a must to calculate your customer lifetime value (CLV) as it’s one of the key tools that can help you gauge the effectiveness of your sales and marketing strategy. But lifetime value (LTV) alone doesn't tell the whole story, so it’s recommended to use the calculator for other critical rates such as ROI and CAC as well.