Calculating your customer lifetime value is straightforward once you know the Customer Lifetime Value formula and what each input means. This guide explains the method in plain language, walks through a manual calculation, and gives worked examples you can follow — then you can do it instantly with the Customer Lifetime Value Calculator.
What is Customer Lifetime Value?
The Customer Lifetime Value calculation tells you your customer lifetime value from a few simple inputs. The figure you are solving for here is the customer lifetime value, expressed in INR.
The Customer Lifetime Value formula
The core formula is:
Customer lifetime value = Average purchase value × Purchases per year × Customer lifespan (years)Here is what each input means:
- Average purchase value — a money amount. Example: ₹2,000.
- Purchases per year — a number. Example: 4.
- Customer lifespan (years) — a number. Example: 3.
How to calculate it step by step
- Write down the average purchase value (for example, ₹2,000).
- Write down the purchases per year (for example, 4).
- Write down the customer lifespan (years) (for example, 3).
- Apply the formula above to get your customer lifetime value.
- Double-check the result with the Customer Lifetime Value Calculator.
Worked examples
Example 1
| Input / Output | Value |
|---|---|
| Average purchase value | ₹2,000 |
| Purchases per year | 4 |
| Customer lifespan (years) | 3 |
| Customer lifetime value | ₹24,000 |
| Annual value per customer | ₹8,000 |
With average purchase value of ₹2,000, purchases per year of 4 and customer lifespan (years) of 3, the customer lifetime value works out to ₹24,000.
Example 2
With average purchase value of ₹4,000, purchases per year of 4 and customer lifespan (years) of 3, the customer lifetime value works out to ₹48,000.
| Result | Value |
|---|---|
| Customer lifetime value | ₹48,000 |
| Annual value per customer | ₹16,000 |
Example 3
With average purchase value of ₹1,000, purchases per year of 4 and customer lifespan (years) of 3, the customer lifetime value works out to ₹12,000.
| Result | Value |
|---|---|
| Customer lifetime value | ₹12,000 |
| Annual value per customer | ₹4,000 |
Tips for an accurate result
- Keep your units consistent — mixing, say, months with years or grams with kilograms is the most common source of error.
- Round only at the very end. Rounding inputs early can shift the final answer noticeably.
- Re-run the numbers whenever an input changes, rather than estimating from an old result.
Prefer not to do the maths by hand? — the Customer Lifetime Value Calculator does it instantly, for free, with the formula and a worked example built in.
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