Customer lifetime value (simple): Estimating Customer Value from Gross Contribution
The simple lifetime-value model combines revenue per period, gross margin and expected retention periods. It produces a scenario for customer contribution under stable assumptions.
Use the Customer lifetime value (simple) Calculator to enter your own figures and compare the result with the worked example below.
Customer lifetime value (simple) formula
LTV = Revenue per customer per period × Gross margin × Expected retained periods
Worked example
| Item | Example value |
|---|---|
| Revenue per customer per period | 100 USD |
| Gross margin | 60 % |
| Expected retained periods | 12 periods |
| Customer lifetime value (simple) | 720 USD |
These are illustrative inputs, not current prices, rates or recommended targets. Where a currency is shown, keep all comparable money amounts in the same currency; conversion examples identify the two sides separately.
How to interpret the result
Retention and margin estimates can dominate the answer. It does not automatically discount future cash flows or model changing customer behavior.
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Method and further reading
The example follows the FinMathly calculator method. For broader background, see SEC: Understanding financial statements. The background resource may use jurisdiction-specific terms; it does not replace the assumptions of this calculator.
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