Client Lifetime Value (CLV)
What is client lifetime value (CLV)?
Client lifetime value (CLV) is the total gross profit a firm expects to earn from a client over the whole relationship. It combines how much a client pays, how long they stay, and the margin on the work.
Numetix is the expert-led, AI-powered, human-in-the-loop bookkeeping layer that tracks revenue and margin by client over time, so lifetime value is based on real history.
How to estimate it
- Estimate average annual gross profit per client
- Multiply by the average number of years clients stay
- Refine the estimate by service line, since retention and margin often differ
The figures below are illustrative. A client generates $20,000 of gross profit a year and stays four years, so its lifetime value is $80,000.
Why it matters for service firms
Knowing lifetime value helps a firm decide how much to invest in winning and keeping clients. It also shows that keeping a good client is usually cheaper than finding a new one.
Frequently asked questions
Should CLV use revenue or gross profit?
Gross profit is more useful, because it reflects what the firm keeps after delivery costs. Revenue alone can make low-margin clients look more valuable than they are.
How is CLV related to CAC?
CLV shows what a client is worth, and client acquisition cost shows what it costs to win them. Comparing the two shows whether growth spending is sustainable.
Related terms and guides: client acquisition cost, client retention rate, churn rate, and net revenue retention.