Lifetime value tells you how much you can afford to spend to win a customer. Computed on revenue it is a vanity number; computed on margin it is a budget.
Customer lifetime value calculator
What a customer is worth over the whole relationship, at margin not revenue.
Lifetime value, at margin
CHF 1,440.00
Lifetime revenue
CHF 2,400.00
Revenue per year
CHF 800.00
Margin per year
CHF 480.00
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How it works
- 1Use the average of real orders, not the price list.
- 2Estimate retention from your own history where you have one.
- 3Apply gross margin so the result is money you keep.
Who it's for
- •Setting how much you can pay to acquire
- •Deciding where to spend retention effort
- •Valuing a customer base
Pro tips
- Without at least a year of history, retention is a guess. Say so when you present the number.
- An average hides the two customers who make the quarter. Look at the distribution too.
Related tools
LTV to CAC ratio calculator
Whether what a customer is worth over their lifetime justifies what they cost to win, and what the ratio says about spending more or less.
Customer acquisition cost calculator
What one new customer really costs you: marketing spend, sales time and tools combined, divided by the customers actually signed.
Churn rate calculator
Your churn and retention rates, the revenue they cost, and the average customer lifetime they imply.
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