Free tool for service businesses

Do you actually know what a client is worth to you?

Most service businesses are flying blind. The LTV:CAC ratio is the single most important number in your marketing, and most people don't know theirs.

Before you calculate, understand what you're measuring

These two numbers, LTV and CAC, tell you more about the health of your marketing than any individual campaign metric.

📈

What is LTV?

Lifetime Value (LTV) is the total revenue (or profit) a single client generates over their entire relationship with your business.

Most business owners think in individual transactions. LTV shifts your thinking to relationships. A client who pays $5,000 once is worth far less than one who stays 3 years on a retainer.

💸

What is CAC?

Customer Acquisition Cost (CAC) is the true cost to acquire one new client, not just your ad spend, but the full picture.

This includes every dollar you spend to bring in business: ads, tools, agency fees, proposals, and, critically, your own time. Most people dramatically underestimate this number.

👁️

The hidden costs people forget

When you ask most business owners what their CAC is, they quote their ad budget. But that's only part of the picture.

Your time on sales calls, pitches and proposals
CRM, email and proposal software subscriptions
Agency or freelancer marketing fees
Content creation costs (designers, copywriters)
Networking events, sponsorships and conferences
Follow-up time that never converts

Add all of this up, and your real CAC is almost always higher than you think, which is exactly why this ratio matters.

The 3:1 benchmark

For every $1 you spend acquiring a client, you should be generating $3 in lifetime value. This is the industry standard for healthy service business marketing.

Below 1:1

Critical: losing money

1-2:1

Thin margins: barely recovering costs

2-3:1

Workable but room to improve

3-5:1

Healthy: solid marketing ROI

5:1+

Strong: may be under-investing

Ready to see your numbers?

Enter your details below to unlock the calculator. Takes about 3 minutes to complete.