Estimate simple customer lifetime value (CLV) from average order value, purchase frequency, gross margin and customer lifespan.
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A $100 average order, 4 purchases per year, 3-year lifespan and 40% gross margin gives estimated CLV of $480.
Estimate simple customer lifetime value (CLV) from average order value, purchase frequency, gross margin and customer lifespan. The result is intended for quick estimates, checking arithmetic and comparing scenarios. When a result affects a contract, tax filing, medical decision, building-code requirement or other high-stakes situation, verify the result with the appropriate professional or authoritative source.
A $100 order placed four times each year over three years is $1,200 of revenue. At 40% gross margin, estimated gross-profit CLV is $480.
This simplified CLV is gross profit from repeat purchases, before customer acquisition cost.
Customer churn, retention distributions, discounting, refunds, and changing margins are not modeled.
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Estimate simple customer lifetime value (CLV) from average order value, purchase frequency, gross margin and customer lifespan.
Simple CLV = average order value × purchases per year × customer lifespan × gross margin percentage.
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