# Customer Lifetime Value Calculator

Customer lifetime value (CLV) is the total gross profit a customer brings your business over the whole relationship. Multiply average ticket by jobs per year, by years they stay, by your gross margin. A customer who spends $380 1.5 times a year for 6 years at 50% margin is worth $1,710 in gross profit, before referrals.

## Key takeaways

- CLV = average ticket × jobs per year × years retained × gross margin.
- Use gross profit, not revenue. Revenue CLV makes every marketing channel look cheaper than it is.
- Referrals belong in the number: a customer who sends you one neighbor is worth roughly twice as much.
- CLV sets your ceiling on customer acquisition cost. A 3:1 CLV-to-CAC ratio is a common rule of thumb.
- Maintenance agreements and fast follow-up raise CLV more than any price increase.

## How do you calculate customer lifetime value?

Customer lifetime value is what one customer is worth to you from the first call to the last job. For a trades business, the clean way to calculate it is average ticket × jobs per year × years retained × gross margin. Add the gross profit from customers they refer, and you have the number that tells you how much a new customer is really worth.

**Formula**

```
CLV (gross profit) = T × J × Y × M × (1 + R)
```

Where:
- T = average ticket: revenue per job
- J = jobs a typical customer buys per year (count maintenance visits)
- Y = years a typical customer keeps using you; from a retention rate, Y = 1 ÷ (1 − retention)
- M = gross margin: (revenue − direct labor − materials) ÷ revenue
- R = referrals: new customers each customer sends you over their lifetime

1. **Pull 12 months of invoices.** Export invoices from your field service software or QuickBooks. Total revenue ÷ number of jobs is your [average ticket](https://www.brix.so/learn/average-ticket).
2. **Count jobs per customer.** Divide the number of jobs by the number of unique customers who paid you in the same 12 months. Most shops land between 1 and 3; recurring routes (pest, lawn, pool) go much higher.
3. **Estimate how long customers stay.** Check what share of last year's customers bought again this year. That is your retention rate. 80% retention works out to about 1 ÷ 0.2 = 5 years.
4. **Apply your gross margin.** Use the gross margin from your P&L, after direct labor and materials but before overhead. See [gross margin](https://www.brix.so/learn/gross-margin) if you're not sure what goes in.
5. **Add referrals.** Ask every new customer how they heard about you and tag it in your CRM. Referred customers ÷ total customers gives you a rough referral rate.

> **Worked example**
>
> A residential service company has a $380 average ticket. Its typical customer books 1.5 jobs a year: $570 a year in revenue.
>
> Customers stay about 6 years, so lifetime revenue is $3,420. At a 50% gross margin, that is $1,710 in gross profit.
>
> Each customer refers 0.5 new customers on average, worth another $855. Total: **$2,565 of gross profit per customer**.
>
> To keep a 3:1 ratio, the company can spend up to $855 to win one new customer. That's more than double the $380 first ticket, which is why a $90 lead that books half the time is cheap for this shop.

## What is a customer worth in different trades?

Customer value looks very different across trades because buying patterns are different. Recurring-route trades earn small tickets many times. Replacement trades earn one big ticket and live on referrals. The table runs the same formula on example assumptions for each.

**Example customer lifetime value by trade**

| Trade and customer type | Buying pattern | Lifetime revenue | Lifetime gross profit incl. referrals | Max CAC at 3:1 |
| --- | --- | --- | --- | --- |
| HVAC, maintenance-plan member | Two tune-ups plus a repair some years | $6,125 | $4,594 | $1,531 |
| Plumbing, repeat homeowner | A repair or two a year, a water heater eventually | $2,520 | $2,079 | $693 |
| Pest control, quarterly plan | Four scheduled services a year | $1,560 | $1,115 | $372 |
| Lawn care, weekly mowing | About 28 cuts across the season | $4,200 | $2,520 | $840 |
| Roofing, one replacement | One big job; value comes from referrals | $14,000 | $8,400 | $2,800 |

_Illustrative assumptions, not industry averages. Each row uses the calculator above; plug in your own numbers. Assumptions: HVAC $350 × 2.5 jobs × 7 yrs × 50% margin, 0.5 referrals; plumbing $420 × 1.2 × 5 × 55%, 0.5; pest $130 × 4 × 3 × 55%, 0.3; lawn $50 × 28 × 3 × 40%, 0.5; roofing $14,000 × 1 × 1 × 30%, 1 referral._

Notice the roofing row. One replacement customer is worth $4,200 in gross profit on their own and $8,400 with a single referral. For a roofer, the referral is half the customer's value. For the plumber, the long relationship is the value: $2,520 of revenue from a customer whose first call might have been a $200 drain clear.

## Should CLV use revenue or profit?

Use gross profit. Revenue CLV is useful for showing how much a customer spends, but you can't spend revenue on marketing; you spend what's left after labor and materials. A shop that compares a $3,000 revenue CLV with a $1,000 acquisition cost thinks it has a 3:1 ratio. At a 40% margin it actually has 1.2:1 and is barely breaking even on growth.

This calculator shows both. Use lifetime revenue when you're talking to the team about why every caller matters. Use lifetime gross profit when you're setting a marketing budget or deciding what a lead is worth.

## What is a good CLV to CAC ratio for a contractor?

A common rule of thumb is 3:1: each customer should return three dollars of gross profit for every dollar spent to win them. It comes from subscription businesses, not the trades, so treat it as a starting point. Below 1:1 you lose money on every new customer. Far above 5:1 often means you're underspending on marketing and leaving work for competitors. Work out your acquisition cost with the [customer acquisition cost calculator](https://www.brix.so/tools/customer-acquisition-cost-calculator).

## How to increase customer lifetime value

1. **Sell maintenance agreements.** They turn a one-off repair customer into scheduled visits every year and keep you first in line for the replacement. Price one with the [maintenance agreement calculator](https://www.brix.so/tools/maintenance-agreement-calculator).
2. **Answer every call from existing customers.** A repeat customer who hits voicemail can call someone else, and then their lifetime value goes with them. See the [missed call calculator](https://www.brix.so/tools/missed-call-calculator).
3. **Follow up on open estimates.** Unsold estimates from existing customers are the cheapest jobs you'll ever win. See [how to follow up on an estimate](https://www.brix.so/learn/how-to-follow-up-on-an-estimate).
4. **Ask for reviews and referrals at the moment the customer is happiest:** right after the job is done.
5. **Track it by lead source.** Customers from referrals and Google often stay longer than customers from lead marketplaces. Your [lead source tracking](https://www.brix.so/learn/lead-source-tracking) tells you where to spend.

## Common mistakes when calculating CLV

- **Using one-time and recurring customers in one average.** Split them. A membership customer and a one-time emergency caller are different businesses.
- **Ignoring the time value of money.** A dollar of profit in year seven is worth less than one today. For long lifespans, treat the result as an upper bound.
- **Counting referrals twice.** If you already include referred customers in your customer count, don't also add a referral multiplier on top.
- **Guessing retention.** Pull it from your customer list. Most owners overestimate how many customers come back.

BRIX keeps every customer, call, quote and invoice in one record, follows up open estimates automatically and asks happy customers for reviews, so more first-time callers turn into long-term customers.

- [CRM](https://www.brix.so/features/crm): One record for every customer, lead, call, job, quote and invoice.
- [Sales automation](https://www.brix.so/features/sales-automation): Follows up every lead and open estimate automatically by text and email, and asks every customer for a review after the job.
- [Review requests](https://www.brix.so/features/reviews-reputation): Asks every customer for a Google review automatically after the job, without filtering who gets asked.

## Frequently asked questions

### What is customer lifetime value in simple terms?

It's how much one customer is worth to your business over the whole time they use you. For a contractor, that's every repair, tune-up, replacement and referral, not just the first ticket. Measured in gross profit, it tells you how much you can afford to spend to win a customer.

### How do you calculate customer lifetime value for a service business?

Multiply average ticket by jobs per customer per year, by the number of years customers stay, by your gross margin. For example, $380 × 1.5 × 6 × 50% = $1,710. Add referral value if customers send you new business.

### How do I turn a retention rate into years?

Average customer lifespan is 1 ÷ (1 − annual retention rate). If 80% of customers come back each year, the average customer stays about 5 years. At 50% retention, it's 2 years.

### What is a good customer lifetime value?

There isn't a single good number; it depends on your trade and ticket size. What matters is the ratio to your customer acquisition cost. If lifetime gross profit is at least three times what you spend to win a customer, your growth is usually healthy.

### Should I include referrals in customer lifetime value?

Yes, if you can estimate them honestly. In trades that do one big job per customer, such as roofing or remodeling, referrals can be half of a customer's value. Track how new customers heard about you so the referral number comes from data, not a guess.

### How do maintenance agreements affect lifetime value?

They usually raise it a lot, because members book scheduled visits every year, stay longer and call you first for repairs and replacements. Run the calculator twice, once with your one-time customers and once with members, to see the difference for your shop.

## Related

- [What Is Customer Lifetime Value (CLV)?](https://www.brix.so/learn/customer-lifetime-value)
- [Customer Acquisition Cost Calculator](https://www.brix.so/tools/customer-acquisition-cost-calculator)
- [Cost Per Lead Calculator (and Marketing ROI)](https://www.brix.so/tools/cost-per-lead-calculator)
- [Maintenance Agreement Pricing Calculator](https://www.brix.so/tools/maintenance-agreement-calculator)
- [What Is Customer Acquisition Cost (CAC)?](https://www.brix.so/learn/customer-acquisition-cost)
- [What Is a Maintenance Agreement?](https://www.brix.so/learn/maintenance-agreement)
- [What Is Average Ticket?](https://www.brix.so/learn/average-ticket)
- [What Is a Membership Program for Home Services?](https://www.brix.so/learn/membership-program)
- [CRM for Home Service Businesses That Fills Itself In](https://www.brix.so/features/crm)
- [Lead Follow-Up Automation That Chases Every Lead and Estimate for You](https://www.brix.so/features/sales-automation)

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Written by BRIX Editorial Team. Last updated 2026-10-12.
Canonical: https://www.brix.so/tools/customer-lifetime-value-calculator