BizJourney
Home › Formulas › Customer lifetime value

How to calculate Customer lifetime value

The Customer lifetime value formula, with plain worked examples you can check yourself.

Customer lifetime value = ARPU × GM ÷ churn

Worked examples

ARPU = 150 · GM = 60% · churn = 5%Customer lifetime value = 1,800
ARPU = 150 · GM = 80% · churn = 2%Customer lifetime value = 6,000
ARPU = 200 · GM = 40% · churn = 4%Customer lifetime value = 2,000

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Brand & Customers.

Related terms

Brand equityMarket shareChurnBrand loyaltyBrand awarenessTarget audience

Practice Customer lifetime value with real numbers

Quizzes, a CEO simulator, a real estate tycoon game and startup tools. Free to start, in 7 languages.

Play BizJourney free →