Measurement

Customer lifetime value

Also called: LTV, CLV

Customer lifetime value is the total gross profit a typical customer produces across every job they ever give you, including repeat work and referrals.

How it is measured

Lifetime value = average gross profit per job × average jobs per customer over their lifetime.

Assumptions and cited research behind this metric are listed on the methodology and sources page.

Why it matters

It sets the ceiling on what you can afford to spend to win a customer. Businesses that price acquisition against a single job systematically underinvest.

Worked example

A HVAC customer worth $340 gross profit on the first visit but averaging four visits over six years is a $1,360 customer, which justifies a much higher acquisition cost than the first job alone.

Figures are illustrative models with inputs stated, not audited client results.

Systems that use this

Where it comes up

FAQ

Customer lifetime value: common questions

Related terms

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