Accounting Customer Lifetime Value (Monthly) Calculator
Estimate the net value of an average customer using monthly revenue, gross margin, churn, service costs and acquisition cost.
Overview
This monthly customer lifetime value calculator estimates the net gross profit from an average customer over their expected lifetime. Enter average monthly revenue, gross margin, monthly customer service cost, churn rate, and customer acquisition cost to support pricing, retention, and acquisition decisions.
How it works
The calculator first estimates monthly gross profit by applying your gross margin to monthly revenue and subtracting direct monthly service costs. It estimates customer lifetime by dividing one by the monthly churn rate. Monthly gross profit is multiplied by this expected lifetime, then customer acquisition cost is deducted to produce an estimated net customer lifetime value.
How to use this calculator
- 1Enter the average monthly revenue generated by one active customer.
- 2Add your gross margin percentage before customer-specific service costs.
- 3Enter the average monthly cost of servicing or supporting that customer.
- 4Enter the typical monthly customer churn rate.
- 5Add the average cost to acquire a customer and review the estimated lifetime value.
Example Calculation
Average monthly revenue per customer
$200
Gross margin
70%
Monthly customer service cost
$20
Monthly customer churn rate
5%
Customer acquisition cost
$250
Customer lifetime value
$2,150
With $200 in monthly revenue, a 70% gross margin, $20 monthly service cost, 5% monthly churn, and $250 acquisition cost, estimated customer lifetime value is $2,150 over about 20 months.
Frequently asked questions
What is monthly customer lifetime value?
Monthly customer lifetime value estimates the net gross profit an average customer generates over their relationship with your business, using monthly operating measures.
How is customer lifetime estimated from churn?
A simple estimate divides one by the monthly churn rate expressed as a decimal. For example, 5% monthly churn suggests an average lifetime of about 20 months.
Should customer acquisition cost be included in CLV?
It depends on the metric you use. This calculator deducts customer acquisition cost so the result represents estimated net value after acquisition spending.
What costs should be included in monthly service cost?
Include direct costs that vary with serving a customer, such as support, account management, onboarding, hosting, or delivery costs not already reflected in gross margin.
Why can customer lifetime value differ by customer segment?
Different segments may have different revenue levels, margins, service needs, acquisition costs, and churn rates. Calculating CLV by segment can provide a more useful view than one overall average.
Does this calculator account for revenue growth or discounting?
No. It assumes stable monthly revenue, costs, and churn and does not discount future cash flows. It is designed as a practical operating estimate.
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Assumptions and warnings
Assumptions
- The churn rate is assumed to remain consistent throughout the customer relationship.
- Monthly revenue, gross margin, and direct service costs are assumed to be stable for the average customer.
- Customer lifetime is estimated as one divided by the monthly churn rate.
- Customer acquisition cost is treated as a one-time cost at the start of the relationship.
- Results are estimates and do not include taxes, financing costs, or indirect overheads unless they are included in your inputs.
Warnings
- This calculator provides an estimate only and is not accounting or financial advice.
- Averages can hide important differences between customer segments, contracts, and retention cohorts.