Calculate Customer Lifetime Value -
Customer Value Calculator
The Customer Lifetime Value (CLV) indicates the total financial 'worth' of a customer. The term Customer Lifetime Value can be translated into German as Kundenwert.
Easily calculate some of the most important metrics here, for free and without hassle:
How valuable is a new customer?
Did your marketing pay off?
Does customer acquisition pay off?
How much can you spend on marketing?
Use the simple onlineKarma Customer Value Calculator here to get immediate answers to your questions.
Customer Value Calculation
Customer value is calculated based on revenue, contribution margin, years of customer loyalty, number of referred customers, and customer acquisition costs.
Average Revenue per Customer
This is the average amount a customer spends per year.
Example: Shoe Retailer: If you gain a new customer, such as Mr. Müller, he might spend CHF 100 on his first pair of shoes. So, the initial revenue from Mr. Müller is CHF 100. If he is happy with his purchase, he might buy another pair of shoes next year, perhaps for CHF 150. In this case, the average revenue from Mr. Müller would be CHF 125.
Years of Customer Loyalty
Experience shows that your customers might switch providers after an average of 4 years. Therefore, you can enter '4 years' for the 'Number of Years' value.
Average Contribution Margin in Percent
The contribution margin is the portion of revenue that remains after deducting variable costs.
For example, if you sell a pair of shoes for CHF 100, and your cost for them is CHF 40, then CHF 60 remains to cover your overhead, capital, and risk costs. This means your contribution margin is 60%.
If you offer consulting or similar services, you would deduct variable costs, such as project wages, from your revenue.
Discount Factor
The discount factor is used to determine the present value of a customer's future contribution margins.
This is based on the principle that money received today is worth more than the same amount received in the future.
These are also referred to as capital costs, which are used to discount a customer's future contribution margins.
Therefore, if you receive a contribution margin of CHF 60 from a customer after one year and apply a discount factor of 5%, that CHF 60 is only worth 95% or CHF 57 today.
Customers Referred by Existing Customers
Acquiring a new customer is doubly valuable. Firstly, due to the recurring revenue over several years, and secondly, because a satisfied new customer can refer additional customers.
If you assume that every 10th customer refers additional customers, you can enter '0.1' for the value 'Number of customers referred annually by an existing customer'. If you believe that each customer refers one new customer every two years, then enter '0.5'.