Free tool
Customer Lifetime Value (CLV) Calculator
Estimate the gross-margin value of a customer over their whole relationship — the number that sets your acquisition budget.
Customer lifetime value
$800
Avg. lifespan
20 months
CLV sets your acquisition ceiling
If a customer is worth $800 in gross margin over their lifetime, you can rationally spend up to that to acquire them — minus the profit you want. CLV turns retention and margin into a single budgeting number.
Retention is the biggest lever
Because CLV divides by churn, a small retention improvement moves it a lot. Cutting monthly churn from 5% to 4% lifts lifetime from 20 to 25 months — and CLV with it. Pug's retention cohorts show where that churn actually happens.
Frequently asked questions
- How do you calculate customer lifetime value?
- A common formula is CLV = (average revenue per customer per month × gross margin) ÷ monthly churn rate. Dividing by churn captures how long customers stay — lower churn means a longer lifetime and higher CLV.
- Why include gross margin?
- Revenue is not profit. Multiplying by gross margin gives the value you actually keep from each customer, which is what you can afford to spend acquiring them.
- How does CLV relate to CAC?
- CLV is the ceiling on what you can pay to acquire a customer. A healthy business keeps an LTV:CAC ratio of roughly 3:1 or better — see the CAC calculator.
Put it to work with Pug.
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