Estimate what a client is worth over the whole relationship, in revenue and in gross profit, and whether you are spending the right amount to win new ones.
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Lifetime revenue
$72,000.00
$3,000.00/month over 24.0 months
Lifetime gross profit
$36,000.00
What the client is actually worth
CLV : CAC
7.2 : 1
Healthy (3:1 or better)
CAC payback
3.3 months
Months of gross profit to recover CAC
A client paying $3,000 a month who stays two years is a $72,000 relationship, not a $3,000 sale. Seeing that number changes decisions: how much to spend on a proposal, whether a first-project discount is worth it, and how much effort to put into keeping clients rather than replacing them.
Lifetime value only means something next to the cost of winning a client. Compare the two, and track how long it takes to earn back acquisition cost. Late payments stretch that payback period too, because the profit a client generates is only useful once the cash arrives.
Average monthly revenue per client x gross margin x average client lifespan in months. Using gross margin rather than revenue gives the profit a client is worth, which is what you should compare with the cost of winning them.
Average how many months your past clients stayed, or use monthly churn: lifespan in months is roughly 1 divided by the monthly churn rate. A 4% monthly churn rate means clients stay about 25 months on average.
A common rule of thumb is 3:1 or better: each client is worth at least three times what it cost to win them. Below 1:1 you lose money on every new client. Far above 5:1 can mean you are underinvesting in growth.
The number of months of gross profit from a client needed to recover what you spent to win them. Under 12 months is generally healthy for B2B service firms and SaaS.
Use average project value and how many projects a client buys per year. The calculator converts that into monthly revenue so the same lifetime value math applies.
Revenue per client quietly leaks through unbilled work, invoice errors, and late payments. Our free audit shows where.
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