How to calculate your Customer Lifetime Value (CLV)

had a great question about how to calculate the average Customer Lifetime Value (CLV) for your dance studio... if you are just starting to track your numbers or this is not a number that you have looked at before, it can feel a bit overwhelming.

✅️ Quick method (3 numbers, 5 minutes)...

You only need:

Total revenue in the last 12 months (in your currency).
Number of paying customers in that same period (i.e. individual students ).
Estimated annual churn (or retention) - a simple percent (see how to estimate below).

Step A - get Annual Revenue per Customer (ARPC):

➡️ ARPC = Total annual revenue ÷ Number of paying customers

Step B - estimate Average Customer Lifetime (years):

If you know annual retention rate (customers at end of year ÷ customers at start of year), then

➡️ Annual churn = 1 − retention

➡️ Average lifetime (years) ≈ 1 ÷ annual churn

Step C - basic CLV (gross revenue basis):

➡️ CLV ≈ ARPC × Average lifetime (years)

Working Example:

Total revenue last 12 months = $120,000 (your currency)
Paying customers (individual students) = 200
ARPC = $120,000 ÷ 200 = $600 per year
You estimate annual churn ≈ 25% (so most studios lose ~20–30% a year depending on age groups) → lifetime ≈ 1 ÷ 0.25 = 4 years
CLV = $600 × 4 = $2,400 (revenue per student over lifetime)

So the average paying household is worth approximately $2,400 in revenue over their time with you, using these assumptions.

✅️ Super-quick shortcut (no churn math)

If you can’t estimate churn:

➡️ CLV ≈ (Annual revenue ÷ number of customers) × assumed years

Pick assumed years: preschool families often stay 1.5–3 years; school-age families 3–6 years. Use the middle of the range for a quick guess.

Example: ARPC = $600 × 3 years (assumed) = $1,800 CLV.

🤪 Quick sanity checks & next steps:

Segment by preschool vs school-age vs teens - CLV can vary a lot.
Track retention based on the same time of year (e.g., signups in Jan 2024, see how many still pay Jan 2025) - one datapoint beats a guess.
Use CLV to set sensible Customer Acquisition Cost (CAC) targets: CAC should be comfortably less than CLV (e.g., CAC ≤ 25–40% of CLV).

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