Client Lifetime Value (LTV)
Agency glossary · Updated July 2026
Definition
Client lifetime value (LTV) is the total gross profit a single client produces over the whole time they stay with the agency. It combines their average fee, the agency’s gross margin, and how long they typically stay, and it sets how much you can afford to spend winning similar clients.
Average monthly retainer x gross margin % x average client lifespan in monthsWhy it matters
LTV, compared to the cost of acquiring a client, tells you whether each dollar spent on new business comes back several times over. It is the clearest signal of whether the agency can scale profitably.
Use your own numbers
Agency gross margins commonly run about 50 to 65%, and client tenure varies widely, so calculate LTV from your realized data rather than an industry average.
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