What is a good CLV:CAC ratio?

A ratio of 3:1 is the common benchmark — you earn $3 in lifetime value for every $1 spent acquiring a customer. Below 3:1 suggests acquisition is too costly; far above it may mean underinvesting in growth.

Customer acquisition cost — total sales and marketing spend divided by the number of new customers acquired in a period.

Should CLV use revenue or profit?

Profit-based CLV (revenue × gross margin) is more accurate for decisions, since acquiring customers should be funded by the profit they generate, not just revenue.

How can I increase CLV?

Raise average order value, increase purchase frequency (email, loyalty programs), and extend customer lifespan through better retention and service.

Customer Lifetime Value (CLV) Calculator

By the KalkWise Editorial Team Reviewed for accuracy Updated June 2026

What is the customer lifetime value (clv) calculator?

In short

Customer lifetime value (CLV) is the total revenue a customer generates over their relationship with you: average purchase value × purchase frequency × customer lifespan. A customer spending $80 six times a year for 4 years has a CLV of $1,920. A healthy CLV:CAC ratio is 3:1 or higher.

Calculates customer lifetime value from purchase value, frequency, and lifespan, then compares it to acquisition cost (CAC) to show your CLV:CAC ratio.

How to use this calculator

1Enter the average purchase value.
2Enter how many times a customer buys per year.
3Enter the average customer lifespan in years.
4Enter your customer acquisition cost to see the CLV:CAC ratio.

The formula

CLV=value×frequency×lifespan

ratio=CLVCAC

CLV = value × frequency × lifespan; CLV:CAC = CLV / CAC

value: — Average purchase value
frequency: — Purchases per year
lifespan: — Years a customer stays
CLV: — value × frequency × lifespan

Worked example

The scenario

$80 average purchase, 6 purchases/year, 4-year lifespan, $120 CAC.

gives

The result

Annual value: $480. CLV: $1,920. CLV:CAC ratio: 16:1. Net value: $1,800.

Common use cases

Setting a maximum sustainable customer acquisition cost.
Justifying marketing spend with unit economics.
Comparing the value of different customer segments.

Limitations & assumptions

Uses revenue, not gross margin — for profit-based CLV, multiply by your margin.
Assumes constant purchase behavior over the customer's lifespan.
Does not discount future revenue to present value.

Frequently asked questions

Multiply average purchase value by purchase frequency (per year) by customer lifespan (years). For profit-based CLV, multiply the result by your gross margin.

Disclaimer: KalkWise calculators are provided for general informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. Results are estimates based on the figures you enter and the assumptions described above. Actual outcomes will vary. Consult a qualified professional before making financial decisions.

Customer economics