Revenue Maths: Calculator
Customer lifetime value calculator
Work out what a customer is worth in gross profit, then compare it with what they cost to win.
Starting values are a worked example for a service business. Replace them with your own numbers.
Healthy. A common rule of thumb is 3:1 or better, so you have room to spend more to grow.
How it's calculated
Lifetime revenue = average job value × jobs per year × years as a customer. Lifetime value = lifetime revenue × gross margin. LTV:CAC = lifetime value ÷ customer acquisition cost.
Don't know your CAC? Use the CAC calculator first.
Questions
What is customer lifetime value?
The total a customer is worth to you over the whole relationship. This calculator uses gross profit rather than revenue, because profit is what pays for acquisition.
How do I estimate jobs per year and years as a customer?
Pull a list of customers from two to three years ago and count how many times each has booked since. Averages from your own records beat any industry figure.
What is a good LTV to CAC ratio?
A common rule of thumb is 3:1 or better. Below 1:1 you lose money on every customer. Between 1:1 and 3:1, retention and repeat work are usually the cheapest things to improve.
How do I increase lifetime value?
Make repeat work easy: service reminders, follow-up after the job, reviews and referral asks, and a database you actually contact. The database reactivation calculator shows what that list may be worth.
Start with a diagnostic.
The 90-Day Plan: a diagnostic of your marketing and a week-by-week plan, built in two weeks. Yours to keep, whether or not we run it.