Customer Lifetime Value Calculator
Put a dollar value on a typical customer over the years they stay with you, including the referrals they send. Then use it to decide how much you can afford to spend winning a new one.
Free, no sign-up. Runs in your browser; nothing you type is stored unless you choose to email yourself the results.
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Email me these results. We'll send your numbers, plus how to turn this calculator into a lead magnet on your own website.
Three steps, about a minute
Step 1
Enter your Average ticket, Jobs per customer per year and Years a typical customer stays.
Step 2
Add your Gross margin and the Referrals per customer (lifetime) you see on average.
Step 3
Read lifetime revenue, gross profit, value with referrals and the comfortable cost to win a customer.
How the customer lifetime value calculator works
Lifetime revenue = average ticket × jobs per customer per year × years a typical customer stays. Lifetime gross profit = lifetime revenue × gross margin. Referrals are added by assuming each referred customer is worth the same gross profit, so value including referrals = gross profit × (1 + referrals per customer). The last line divides that by three, using the common 3:1 rule of thumb that the cost to win a customer should be about a third of their value. The defaults ($350 ticket, 2 jobs a year, 4 years, 50% margin, 0.5 referrals) give $2,800 in revenue, $1,400 gross profit, $2,100 with referrals and a comfortable acquisition cost of $700. Pull the inputs from your own invoices. Trades with mostly one-time jobs will show a low jobs-per-year figure, and that is fine.
| Average ticket | $350 |
|---|---|
| Jobs per customer per year | 2 |
| Years a typical customer stays | 4 |
| Gross margin | 50% |
| Referrals per customer (lifetime) | 0.5 |
| Lifetime revenue per customer | $2,800 |
|---|---|
| Lifetime gross profit | $1,400 |
| Value including referrals | $2,100 |
| Comfortable cost to win one customer (3:1 rule) | $700 |
The 3:1 rule of thumb keeps the cost to win a customer at about a third of what they're worth. Use your own job history for the inputs.
Using the numbers like a pro: tips for local service businesses
Offer a maintenance plan or yearly service agreement. It turns occasional customers into scheduled ones and raises the jobs-per-year input without cutting your price.
Record referrals properly. Ask every new customer how they heard about you and note the name of the person who sent them, so the referral input reflects reality.
Compare the result with what you really pay to win a customer: total marketing spend ÷ new customers in the same period. If that cost sits well under a third, you have room to grow.
Want us to do this for you?
Lifetime value changes how you judge marketing. A first job that barely breaks even can still be a good buy if that customer returns twice a year and sends a friend. Use the comfortable cost figure to set budgets for Google Ads and Local Services Ads, then build in the follow-up that keeps people coming back: review requests, maintenance reminders and seasonal emails.
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Customer Lifetime Value Calculator questions
How do you calculate customer lifetime value?
Multiply average ticket by jobs per year and by the number of years a customer stays, then multiply by gross margin to turn revenue into profit. A $350 ticket, twice a year for 4 years at a 50% margin, comes to $1,400 in lifetime gross profit. Adding referral value gives a fuller picture.
What is a good LTV to CAC ratio?
About 3:1 is a widely used rule of thumb: the customer is worth three times what it cost to win them. Much lower and growth eats your profit. Much higher can mean you are spending too little on marketing and leaving jobs on the table. Treat it as a guideline, not a law.
How can a service business increase customer lifetime value?
Raise any of the inputs. Offer maintenance plans to add visits per year, train techs to point out real problems that need fixing, stay in touch so customers stay longer and ask for referrals at the end of a good job. Protect margin by pricing properly instead of discounting.
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