ClarivoxxBy Abdessamad Ghanem

Free tool

Customer Lifetime Value (CLV) Calculator

CLV = monthly revenue per customer × gross margin ÷ monthly churn rate. Divide CLV by what it costs to acquire a customer (CAC) to get the LTV:CAC ratio, and divide CAC by monthly gross profit per customer to get the payback period in months.

Per customer, per month

Customer lifetime value

$20,000

LTV:CAC ratio

3.3 : 1

In the healthy range for B2B SaaS.

CAC payback

15.0 months

Average customer lifetime

50 months

1 ÷ monthly churn rate.

CLV = $500 × 80% ÷ 2% = $20,000
LTV:CAC = $20,000 ÷ $6,000 = 3.3
Payback = $6,000 ÷ $400 per month

Frequently asked questions

How do you calculate customer lifetime value?
Multiply the average monthly revenue per customer by your gross margin to get monthly gross profit, then divide by the monthly churn rate. With $500 a month, 80% margin and 2% monthly churn, CLV is $500 × 0.8 ÷ 0.02 = $20,000.
What is a good LTV:CAC ratio?
Around 3:1 is the usual target for B2B SaaS. Below 1:1 you lose money on every customer; well above 5:1 often means you could invest more in growth.
Why use gross margin instead of revenue?
Revenue overstates what a customer is worth, because hosting, support and onboarding costs come out of it. Gross margin gives the profit each customer actually contributes, which is what CAC has to be paid back from.

About the author

Abdessamad Ghanem

Customer Experience & Customer Success Consultant · Founder of Clarivoxx

Abdessamad Ghanem works across Customer Support, Sales, Customer Success, Account Management and Partner Management. He writes Clarivoxx Insights for B2B SaaS professionals who own retention, adoption and customer outcomes.

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