METHOD & GUIDANCE
How this calculation works
Keep every input on the same time basis—for example, one month or one financial year—and do not mix cash figures with accrual figures. Tool IQ recalculates every output immediately; nothing you enter is saved or sent to us.
How to use the result
Build the estimate from one customer cohort and a consistent contribution basis, then compare it with acquisition cost and a conservative retention case.
Worked example
A 75 average order, six purchases a year and a three-year relationship produces 1,350 lifetime revenue; at 55% margin, gross-profit LTV is 742.50.
Common mistakes
- Using revenue instead of gross profit for the value comparison.
- Combining purchase frequency from loyal customers with lifetime from all customers.
- Treating a forecast lifetime as observed retention.
Frequently asked questions
Is the customer lifetime value calculator free?
Yes. It requires no account and stores no calculation inputs.
Can I use the answer for a formal filing?
No. It is a planning estimate, not accounting, tax, legal or investment advice. Confirm material decisions with a qualified professional.
Which period should I use?
Keep every input on the same basis—for example, one month or one financial year. Use current figures first, then save a cautious scenario for comparison.
Continue the decision
- Customer Acquisition Cost Calculator — Compare acquisition cost with estimated customer value.
- Average Order Value Calculator — Connect order value with margin, repeat buying and CAC.
Popular small-business decision paths
- Build the next cash-flow forecast
- Measure how quickly invoices become cash
- Calculate UK late-payment interest
Method reviewed 5 August 2026. Figures are illustrative and calculated locally in your browser. Official sources are linked where a rule or obligation affects how the result should be used. Read the Tool IQ calculation standard for our checking process, limitations and corrections policy.