Marketing & agency
Agency Client Lifetime Value Calculator
Works agency client value, where retention is the entire business model.
Result
Gross profit, not revenue, because revenue you spend delivering the work is not available to spend winning customers. Referrals are the least reliable input here; measure yours rather than assuming.
Get a Free Business AuditHow the calculation works
Monthly retainer or average project value times the frequency and the months retained, with margin applied, plus referrals. Because acquisition is expensive in senior time, agency economics depend almost entirely on how long clients stay, which makes retention rather than new business the dominant variable.
What moves the number
- Months retained, which dominates the figure.
- Retainer or project value and margin.
- Scope growth within existing accounts.
- Referrals generated.
Where this one goes wrong
An agency losing clients at the rate it wins them is spending expensive senior time to stand still, which is the pattern that keeps agencies busy and unprofitable, and the fix is service delivery rather than more pitching. Measure retention first. Scope growth within existing accounts is the other lever and the cheapest revenue an agency can find, since the relationship and the understanding already exist.
Before you quote
- Measure retention before investing further in new business.
- Pursue scope growth in existing accounts.
- Track which client types retain and which do not.
Questions
About this calculator
Why does retention matter so much to an agency?
Because acquisition costs expensive senior time. An agency losing clients at the rate it wins them is spending that time to stand still, which is the pattern that keeps agencies busy and unprofitable.
What is the cheapest agency revenue?
Scope growth within existing accounts, since the relationship and the understanding already exist and no pitching is required. It is consistently the highest-margin revenue available and consistently under-pursued.
Do some client types retain better?
Considerably, and tracking which ones is worth doing. Clients who were won on price tend to leave on price, while clients won on fit and capability stay longer, which changes which opportunities are worth pitching for.
The formula
lifetime value = average job x jobs per year x years x gross margin
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How to use this calculator
- Average job value ($). Enter your own figure; the page starts at $3,800.
- Jobs per customer per year. Enter your own figure; the page starts at 1.4.
- Years they stay. Enter your own figure; the page starts at 6.
- Gross margin (%). Enter your own figure; the page starts at 56%.
- Customers they refer. Enter your own figure; the page starts at 0.4.
The result updates as you type, so you can try a figure, see what it does to lifetime gross profit, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Average job value | $3,800 |
| Jobs per customer per year | 1.4 |
| Years they stay | 6 |
| Gross margin | 56% |
| Customers they refer | 0.4 |
What comes out
| Result | Value |
|---|---|
| Lifetime gross profit main result | $17,875 |
| Lifetime revenue | $31,920 |
| Including referred customers | $25,025 |
| Gross profit per year | $2,979 |
One customer is worth $17,875 of gross profit over 6 years, or $25,025 once the people they refer are counted. That is what you can afford to spend winning one.
How sensitive the answer is
Holding everything else steady and changing only average job value, this is what happens to lifetime gross profit. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Average job value ($) | Lifetime gross profit |
|---|---|
| $1,900 | $8,938 |
| $2,850 | $13,406 |
| $3,800 example above | $17,875 |
| $5,700 | $26,813 |
| $7,600 | $35,750 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Average job value ($)
- A money amount, starting at $3,800.
- Jobs per customer per year
- A number, between 0 and 60, starting at 1.4.
- Years they stay
- A number, between 0 and 60, starting at 6.
- Gross margin (%)
- A percentage, between 0 and 95, starting at 56%.
- Customers they refer
- A number, between 0 and 20, starting at 0.4.
What the results tell you
| Result | What it is |
|---|---|
| Lifetime gross profit | The headline result. A money figure. |
| Lifetime revenue | A money figure. |
| Including referred customers | A money figure. |
| Gross profit per year | A money figure. |
Attribution is the weak link
Return and cost-per-lead figures depend on knowing which enquiries came from which source, and most home-services businesses do not track that reliably. If the source data is guesswork, so is the return.
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.