Customer Lifetime Value and CAC Calculator
Estimate customer revenue, gross profit and contribution after acquisition. Compare two customer segments for a store and a subscription business with transparent assumptions and full calculations.
Currency changes formatting only, not exchange rates.
Gross margin already deducts cost of goods or service delivery. Enter only extra variable costs not included in that margin; do not deduct the same cost twice. CAC is paid at the start. Taxes, overhead and unspecified costs are excluded, so the remaining contribution is not accounting net profit.
Discounting uses the effective annual rate and elapsed months divided by 12. Set the rate to 0 for no discounting. Nominal totals and ordinary payback do not change when the discount rate changes.
Try an illustrative example
Store customer value
This model assumes a fixed relationship length and evenly spread purchases. Purchases per year and relationship length in years are used internally. Monthly cash flows occur at period ends, including a partial final month. Payback is modelled, not an actual order date.
Segment A
Segment B
Customer value results · Segment A
Compare customer segments
Both segments use the same model but may have different assumptions. An expected value is not a guaranteed outcome. A higher ratio alone does not prove a better acquisition channel.
From revenue to remaining contribution
- Revenue over the entered horizon
- Costs already included in gross margin
- Extra variable costs
- Customer acquisition cost (CAC)
- Contribution remaining after CAC
All bars use the selected currency. Starting with revenue, subtract the costs included in gross margin, extra variable costs and CAC. The final bar is the remaining contribution, not accounting net profit.
Follow customer value and CAC recovery
Horizontal axis: elapsed months. Vertical axis: selected currency. The lines step at assumed period-end receipts; no continuous receipt dates are invented.
Work backwards from a target value-to-CAC ratio
Targets use undiscounted contribution before CAC for Segment A over the entered horizon. The ratio is your own planning assumption, not a universal benchmark. Maximum CAC is rounded down and required price up to two decimal places; formulas keep unrounded values.
What changes customer value?
Revenue, frequency, churn and extra-cost changes are relative percentages. Margin rises by 5 percentage points; store lifespan rises by 1 year. Each change is tested alone. Values outside input limits are not calculated. These are illustrations, not forecasts.
Monthly calculation table for Segment A
The initial row includes CAC paid at time zero. All period rows are shown, including a partial final month in the store model. Units mean orders for a store and probability-weighted active months for a subscription.
See the full calculation for Segment A
A = Average order value; W = Expected number of orders; m = Gross margin (%) / 100; s = Extra cost per order; I = Customer acquisition cost (CAC); V = Contribution CLV before CAC; h = Your target contribution CLV / CAC; r = Assumed effective annual discount rate (%) / 100; t = Elapsed months.
Subscription customer value
Every acquired customer is active in the first month. A constant proportion churns at each month-end; there is no reactivation or expansion revenue. Future revenue and service costs are weighted by the probability of still being active. The horizon is finite even with zero churn.
Segment A
Segment B
Customer value results · Segment A
Compare customer segments
Both segments use the same model but may have different assumptions. An expected value is not a guaranteed outcome. A higher ratio alone does not prove a better acquisition channel.
From revenue to remaining contribution
- Revenue over the entered horizon
- Costs already included in gross margin
- Extra variable costs
- Customer acquisition cost (CAC)
- Contribution remaining after CAC
All bars use the selected currency. Starting with revenue, subtract the costs included in gross margin, extra variable costs and CAC. The final bar is the remaining contribution, not accounting net profit.
Follow customer value and CAC recovery
Horizontal axis: elapsed months. Vertical axis: selected currency. The lines step at assumed period-end receipts; no continuous receipt dates are invented.
Expected customer retention
The chart shows the expected customers remaining after each month-end, not a prediction of particular people. Fractional counts are valid expected values. The first paid month includes every acquired customer.
Work backwards from a target value-to-CAC ratio
Targets use undiscounted contribution before CAC for Segment A over the entered horizon. The ratio is your own planning assumption, not a universal benchmark. Maximum CAC is rounded down and required price up to two decimal places; formulas keep unrounded values.
What changes customer value?
Revenue, frequency, churn and extra-cost changes are relative percentages. Margin rises by 5 percentage points; store lifespan rises by 1 year. Each change is tested alone. Values outside input limits are not calculated. These are illustrations, not forecasts.
Monthly calculation table for Segment A
The initial row includes CAC paid at time zero. All period rows are shown, including a partial final month in the store model. Units mean orders for a store and probability-weighted active months for a subscription.
See the full calculation for Segment A
A = Monthly revenue per active customer; W = Expected paid months within horizon; m = Gross margin (%) / 100; s = Extra cost per active customer-month; I = Customer acquisition cost (CAC); V = Contribution CLV before CAC; h = Your target contribution CLV / CAC; r = Assumed effective annual discount rate (%) / 100; t = Elapsed months.
Understand the model before using the result
Revenue, gross profit and contribution are different measures. Contribution CLV subtracts the entered extra variable costs, while the after-CAC value also subtracts acquisition once. Subscription churn refers to lost customers, not lost revenue. Constant prices, margin and churn are assumptions. Fixed-horizon expected values do not include all future income, risk, taxes or overhead.
Calculation references
Customer value questions
Is CLV revenue or profit?
The name is used for different definitions. This calculator labels revenue, gross-profit CLV, contribution before CAC and contribution after CAC separately. None is automatically accounting net profit.
Why is customer churn different from revenue churn?
Customer churn is the fraction of active customers leaving during a month. Revenue churn also depends on account size, upgrades and downgrades. This model uses customer churn with constant revenue per active customer, not net revenue retention.
What happens with zero churn?
Every customer remains active throughout the entered horizon. The calculator sums only those months and does not divide by zero or display an unlimited lifetime value.
Is a particular CLV/CAC ratio always good?
No. The useful ratio depends on the value definition, time horizon, cash-flow timing and business costs. The target is editable and is not a universal risk rating or a recommendation.
How is CAC recovery calculated?
CAC is paid at the start. Recovery is the first modelled period-end when cumulative contribution covers it. Discounted recovery uses present values. If the horizon does not contain a crossing, no later date is invented.
What should I enter as extra cost?
Only variable costs not already deducted in gross margin. Double-counting costs understates customer value. Enter the cost per order for a store or per active customer-month for a subscription.
Calculations run in your browser. The calculator does not send these inputs to its server or save them.