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Customer Lifetime Value (LTV) Calculator

Work out what a home-services customer is really worth across the whole relationship, not just the first job. Adjust your average job value, jobs per year, retention years, gross margin and referrals, and see the margin-based LTV, the revenue LTV, the value including referrals, and the most you can sustainably pay to acquire a customer under the classic 3:1 LTV:CAC rule. A transparent, directional model grounded in the retention research of Bain & Company and Harvard Business Review.

Your numbers
$

What you invoice on average each time this customer hires you.

How many times a loyal customer hires you in an average year.

5

How long, on average, the relationship with a retained customer lasts.

45 %

The share of revenue left after the direct costs of each job.

1

New customers a happy customer brings you over their lifetime.

What a customer is worth
Lifetime value (LTV)$1,181margin value of one customer across the whole relationship
Revenue LTV$2,625
Value incl. referrals$2,363
Max sustainable CAC$394
Jobs over lifetime7.5

Directional model: real LTV depends on your actual retention, margin and referrals. The headline LTV uses margin, not gross revenue. The max CAC applies the classic 3:1 LTV:CAC rule. That retaining costs less than acquiring, and that small retention gains lift profit sharply, is documented by Bain & Company (Reichheld) and Harvard Business Review.

How it works

Most home-services contractors look at the price of a job and stop there. But a customer who calls about a leak today might come back a year from now for the water heater, refer their brother-in-law, and leave you, in total, several times what you invoiced the first time. That accumulated value has a name: customer lifetime value, or LTV.

This calculator puts a number on it. Adjust your figures above and see, in real time, what a customer is truly worth and how much you can afford to pay to acquire a new one.

How to read the results

  • Lifetime value (LTV) is the big number: the margin a customer leaves across the whole relationship, not just the first job. It uses margin, not revenue, because that is what you actually keep.
  • Revenue LTV is the same customer lifetime before applying margin. It is a reference, not a number to decide on.
  • Value incl. referrals adds the effect of recommendations: a happy customer who refers another nearly doubles their real value, at no marketing cost.
  • Max sustainable CAC is the ceiling on what you can pay to acquire a customer under the 3:1 rule: your LTV divided by three.

Retention is not a detail, it is the business

The most-cited figure in customer economics comes from Bain & Company and Harvard Business Review: increasing customer retention by 5% can lift profits by 25% to 95%. The reason is simple: acquiring a new customer costs several times more than keeping one who already trusts you, and that loyal customer buys more often, haggles less, and brings others. In home services, where trust is everything, that effect compounds.

The 3:1 rule between LTV and CAC

The classic unit-economics rule says a customer should be worth, over their lifetime, at least three times what it costs to acquire them. That ratio leaves room to cover fixed costs, mistakes, and the time it takes to recoup the investment. The tool calculates your max CAC by dividing LTV by three: above that ceiling, growth costs you money; below it, you have room to invest more in acquisition without risk.

What to do with the number

If the LTV surprised you on the upside, the conclusion is almost always the same: you are underinvesting in keeping the people who already know you. The next step is not to spend more on ads blindly, but to close the loop. The operations page explains how to systematize aftercare so customers come back, and the conversion page how to convert more of those who already call. To raise referrals, the guide on customer aftercare and repeat revenue is the place to start.

Once you know what a customer is worth, look at the rest of the tools to size up the other leaks in your business. And if you want your real numbers on the table, let's talk.

Real benchmarks

The data behind the defaults

Every default value is anchored to a verifiable industry source.

25-95%
Increasing customer retention by just 5% can lift profits by 25% to 95%
Source: Bain & Company (Frederick Reichheld), Harvard Business Review
5-25x
Acquiring a new customer costs several times more than retaining an existing one
Source: Harvard Business Review (Amy Gallo, 2014)
We answer before you ask

Questions about this tool

The real questions we get about how to read these numbers.

Direct help

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Thirty minutes by video or phone. No jargon. The team answers with data from your business on the table.

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  1. Q/01How does the tool calculate customer lifetime value?

    It first multiplies jobs per year by the years a customer stays with you to get jobs over their lifetime. That, times your average job value, gives the revenue LTV. The headline figure, the main LTV, also applies your gross margin: it is the value in margin, not in revenue, because that is what you actually keep. Separately it shows the value including referrals (each happy referral adds roughly another LTV) and the max sustainable CAC, which divides the LTV by three. Everything is directional and recalculates in real time as you move the controls.

    Sources & resources
  2. Q/02Why does the headline LTV use margin instead of revenue?

    Because revenue is not your money: every job spends materials, subcontractors, travel and labor hours. If you calculate LTV on gross revenue you overvalue the customer and end up overpaying to acquire them. Using gross margin gives the real value a customer leaves in your pocket over the years, which is the honest basis for deciding how much to invest in marketing and acquisition. The revenue LTV is shown separately as a reference, not as the number you decide on.

    Sources & resources
  3. Q/03What is the 3:1 LTV:CAC rule and how do I use it?

    It is the classic unit-economics guideline: a customer's lifetime value should be at least three times what it costs to acquire them (CAC). If your margin LTV is one thousand dollars, the max sustainable CAC is around three hundred and thirty. Above that, each new customer costs more than they leave over the long run. Below it, you have room to invest more in acquisition and grow. The tool calculates that ceiling by dividing LTV by three so you know how much you can spend on ads, sales or referrals without losing money.

  4. Q/04What gross margin should I enter if I do not know it exactly?

    For home services, gross margin (what is left after materials and the direct costs of the job, before fixed overhead) typically runs between 35% and 55% depending on the trade and whether you subcontract. If you have not measured it, start at 45% and adjust. The important thing is to be realistic: an inflated margin inflates LTV and leads you to overpay to acquire. To sharpen it, take three or four recent jobs and subtract from the invoice everything it cost to deliver them.

  5. Q/05Why do referrals matter so much in a customer's value?

    Because a happy customer does not just come back: they bring others. In home services, word-of-mouth referral is one of the cheapest and most trusted acquisition channels, and a single referral can double a customer's real value at no marketing cost. That is why the tool lets you adjust how many new customers they refer on average. If you invest in aftercare and in asking for reviews, that number rises, and with it your effective LTV and the CAC you can afford.

    Sources & resources
  6. Q/06Are these numbers a promise of results?

    No. It is a directional model to size up what a customer is worth and make investment decisions sensibly, not a guarantee. Real LTV depends on your retention, your margin, your ticket and how many referrals you actually generate. The value of the tool is to give you a clear order of magnitude: if a customer is worth far more than you thought, you are probably investing too little in keeping them and far too little in acquiring.

    Sources & resources
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