Customer Lifetime Value (CLV) Calculator
- No invented stats
- Written for UK readers
- Published 19 September 2026
Work out roughly how much gross profit an average customer is worth over the whole time they stay with you. Enter what a customer pays you each month, your gross margin on that revenue, and your monthly churn rate. It is an estimate rather than a measurement, for reasons set out below, and it runs entirely in your browser.
How this works
This is the simple version of the formula: average revenue per customer, multiplied by gross margin, divided by churn rate. All three figures need to be on the same time basis, so this calculator uses months throughout.
The reason dividing by churn works is that one divided by your churn rate gives you the average customer lifetime in months. If 2% of customers leave each month, the average customer stays 1 ÷ 0.02 = 50 months. Multiply the monthly gross profit by that lifetime and you have the lifetime value.
Two deliberate choices are worth naming. First, the calculator uses gross margin, not revenue, because revenue you spend on delivering the service was never yours. Second, it assumes churn is constant — that the same percentage leaves every month, forever. That assumption is what makes the arithmetic possible, and it is also the formula's main weakness.
Because churn sits in the denominator, the result is very sensitive to it. A customer base churning at 1% a month has double the lifetime value of one churning at 2%, on identical revenue. If you only improve one input, improve that one.
A worked example
Suppose an average customer pays you £250 a month, your gross margin is 75%, and 2% of customers leave each month. These are illustrative figures, not benchmarks — use your own.
Monthly gross profit per customer: £250 × 75% = £187.50.
Average customer lifetime: 1 ÷ 0.02 = 50 months, or about 4.2 years.
Lifetime value: £187.50 × 50 = £9,375.00.
The same customer at 4% monthly churn would have a 25-month life and a lifetime value of £4,687.50 — half as much, on exactly the same revenue. Nothing about the selling changed; only how long people stay.
That number is mostly useful as a ceiling. It tells you what you can justify spending to win a customer. Put it next to your customer acquisition cost and the comparison is the point — a lifetime value of £9,375 against an acquisition cost of £1,250 is a ratio of 7.5:1.
What this doesn't account for
Constant churn is a fiction. In practice churn is usually highest in the first few months and falls as customers embed — so the simple formula, which applies the same rate forever, tends to understate the value of customers who make it past the early period and overstate the value of the cohort as a whole. If you have the data, calculating lifetime value by cohort is considerably more honest than a single blended number.
The formula also ignores the time value of money. Gross profit you will collect in month 50 is not worth what you will collect this month, and a discounted lifetime value would be meaningfully lower than the figure above. For a small business making a rough judgement about acquisition spend, that is usually tolerable; for anything involving a valuation, it is not.
It has no room for expansion revenue, price rises, referrals, or the customers who leave and come back — all of which push real lifetime value up. Nor does it include the ongoing cost of serving an account beyond cost of sales: support time, account management and renewals work are real, and a gross margin figure rarely captures them fully.
Finally, it is an average, and averages hide the interesting cases. If a handful of large accounts carry most of your revenue, the mean tells you very little about what a typical customer is worth, and even less about what the wrong sort of customer costs you.
Spotted a mistake or a number we can't back up? Tell us and we'll fix it.