Customer Lifetime Value Calculator

Customer Lifetime Value (CLV or LTV) is the total revenue a business expects to earn from a single customer over the entire duration of their relationship. The basic formula is: CLV = (Average Revenue Per User x Gross Margin) / Monthly Churn Rate. For a $100/mo subscription with 70% margin and 5% monthly churn, CLV = ($100 x 0.70) / 0.05 = $1,400.

A CLV:CAC ratio of 3:1 or higher is considered excellent, meaning each customer generates 3x what it costs to acquire them. A ratio of 2:1 to 3:1 is good but has room for improvement. Below 2:1 is concerning, and below 1:1 means you are losing money on every customer acquired. The best SaaS companies achieve 5:1 or higher.

Churn rate has the most significant impact on CLV. A 1% monthly churn gives an average customer lifespan of 100 months and much higher CLV. A 5% monthly churn means customers stay only 20 months on average. Reducing churn by even 1% can dramatically increase your CLV and business valuation. Focus on retention before acquisition.

The payback period is the number of months it takes to recover your Customer Acquisition Cost (CAC) from a customer. A payback period under 12 months is ideal for SaaS. If payback takes longer than 18 months, you may face cash flow issues since you are spending to acquire customers faster than you are recouping costs.

Dewx automatically calculates CLV for each customer using real revenue and churn data. The CRM tracks customer health scores, identifies at-risk accounts, and triggers automated retention campaigns. Dew AI recommends upsell opportunities to increase ARPU and suggests interventions to reduce churn, directly improving your CLV.