Free tool
Customer lifetime value calculator
The average sale, how often a customer buys and how long they stay, into what one customer is worth over their whole time with you, in revenue and in gross profit. Add what a customer costs to win and the page says whether that spend pays and how far it could go. Nothing you type leaves your browser.
Winning more of the customers this figure describes, from the searches they already make, is what our SEO services are for.
What a customer is worth
- Lifetime revenue
- 2,160
- Lifetime gross profit
- 972
- Profit to acquisition cost
- 8.1x
- Most to spend per customer at 3 to 1
- 324
What the figure is for
A lifetime value is the reason one business can outbid another for the same click. Two firms in the same trade see the same search; the one that knows a customer comes back three times a year for four years can pay ten times more to win them than the one counting the first job, and it will, and it will keep winning them. The number is not a report figure. It is the ceiling on what you can spend to grow.
That is why the page asks for the margin. The revenue figure is easy to say out loud and most calculators stop there, but an advert, a directory listing or a month of search work is paid for out of gross profit. The comparison that matters is the lifetime gross profit against what a customer costs to win, and the rule of thumb used here is three to one: enough return to cover the overheads the margin does not, with something left. It is a rule of thumb, stated as one. A business with low overheads can run closer; one with high overheads needs more.
The last figure is the practical one. At three to one, a third of the lifetime gross profit is the most you would spend to win one customer. If a lead source costs more than that per customer it produces, it is expensive however cheap the lead looked; if it costs far less, there is room to buy more of it before anything else changes.
Getting the three figures from your own records
The average sale is revenue for a year divided by the number of sales, from the invoices or the booking system. Sales per customer is the number of sales divided by the number of distinct customers in the same year. Years a customer stays is the one people guess, and the guess is usually generous: take the customers who first bought three or four years ago and count what share still buy, then use the typical span rather than the longest. A cautious figure here keeps the ceiling honest, and the ceiling is what the page is for.
Nothing is discounted for time and nothing is added for referrals. Both are real, they pull in opposite directions, and either would turn a figure you can check against your own books into one you have to take on trust.
The figures on either side of this one
What a customer costs to win comes out of the cost per lead calculator, which turns spend and enquiries into a cost per customer. The break-even calculator says how many customers a month cover the fixed costs, and the SEO ROI calculator turns a set of searches into customers and revenue month by month, using the same conversion figures.
Questions about lifetime value
What is customer lifetime value?
What one customer is worth to the business over the whole time they keep buying, rather than on the first sale. A customer who spends a modest amount three times a year for four years is worth twelve sales, and the business that knows that can afford to pay far more to win them than one counting the first sale alone.
Where do the three figures come from?
Your own records, and nothing else is worth using. The average sale is total revenue divided by the number of sales in a year. How often a customer buys is the number of sales divided by the number of distinct customers. How long they stay is the hard one: take the customers who first bought three or four years ago and see what share is still buying, and use the typical span rather than the best case.
Should I use revenue or profit?
Profit, when the number is going to decide what you spend. The revenue figure is easy to quote and it is the one most calculators stop at, but an advert is paid for out of the gross margin, so the page shows both and uses the profit figure for the comparison with what a customer costs to win.
What is a good lifetime value to acquisition cost ratio?
A common rule of thumb is three to one: a customer should return about three times in gross profit what it cost to win them, with the rest covering the overheads the margin does not. It is a rule of thumb rather than a law, and a business with low overheads can run closer than that while one with high overheads needs more. Below one to one the spend is a loss whatever the lead cost.
Is anything I type here sent anywhere?
No. Everything happens in your browser. There is no form submission, no analytics event and no network request of any kind, which you can confirm in your browser’s network tab.
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