Calculate Customer Lifetime Value | Financial Calculators for Gate City Bank

Customer Information

Acquisition cost

The initial cost for acquiring a new customer.

Average purchase

The average purchase amount by the customer for each purchase.

Purchases per year

The number of purchases made by a customer per year.

Marketing expense

The average amount per customer, per year to market to existing customers.

Annual retention rate

The percentage of your customers that you retain from year to year.

Business Information

Gross margin

The gross margin for your business. Gross margin represents total sales revenue less cost of goods sold. To get gross margin percent, divide cost of goods sold by total sales revenue.

Discount rate

The rate at which the value or your revenue and earnings are discounted when calculating their present value.

Evaluation period (years)

The number of years used to calculate customer lifetime value.

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The Lifetime Value of a Customer
Cumulative Revenue	Cumulative Gross Margin	Present Value of Revenue	Present Value of Gross Margin

How much is a customer worth to you? To really know that, it is often important to look at the amount of business they will give you over the course of their lifetime as a customer and not just based on an individual purchase. Knowing how much each customer that you can bring through the door will deliver in sales and profit is an important consideration when you are making marketing decisions and incurring expenses to obtain new customers.