Customer Lifetime Value (CLV) Calculator

Multiplying annual profit by lifespan treats every future year's profit as equally valuable today, but money earned further in the future is worth less than money earned sooner because of the time value of money. Discounting applies your entered discount rate to shrink each future year's profit before adding it in, so discounted CLV is always lower than simple profit-based CLV whenever the discount rate is above zero.

A commonly cited benchmark is roughly 3:1 or higher, meaning a customer needs to be worth at least three times what it costs to acquire them for the business model to have enough margin for overhead, retention costs, and profit. A ratio close to 1:1 suggests a business is barely breaking even on new customers before even counting operating expenses.

No — it applies a single average customer lifespan uniformly to every customer, so it doesn't model the reality that some customers leave in year one while others stay for a decade. If your business has a highly variable retention curve, the average-lifespan approach here will understate the value of your most loyal customers and overstate the value of ones who churn early.

The discount rate represents the return you could earn elsewhere or the risk premium on uncertain future cash flows, so a higher rate makes the same future dollar worth less in today's terms. Since discounted CLV sums a series of present values that each shrink faster at a higher rate, increasing the discount rate always pulls discounted CLV, net CLV, and the CLV:CAC ratio downward together.