Skip to content
Menu

Client Lifetime Value to CAC Ratio

The gross margin a typical client produces over its lifetime, divided by the cost of acquiring that client.

Sales and Growth

Formula

(Monthly revenue per client × Gross margin % × Lifetime in months) ÷ Customer acquisition cost

Why Track It

It answers whether the MSP can afford to spend more to grow. A high ratio says sales is underfunded; a low one says clients are too cheap to win or too quick to leave.

How It Is Measured

Lifetime value is average monthly revenue per client times managed services gross margin times average client lifetime in months (1 divided by monthly logo churn). Customer acquisition cost is sales and marketing spend divided by new clients won, over the same trailing period. Sources: accounting, PSA agreements and CRM.

Constraints

Built on three estimates (margin, lifetime, acquisition cost), so small errors compound. Treat it as a quarterly direction check, not a precise figure.

Measurement Note

Crewhu calls 4:1 the industry gold standard. Lifetime is an estimate from churn, and a young MSP with little churn history can produce an absurdly high ratio. Below 1:1 each client loses money over its whole life.

Referenced In

Glossary and Answers

More in Sales and Growth

How efficiently the MSP turns opportunities into new recurring revenue. These numbers show whether the pipeline can carry the growth target and what each new client costs to win.

All KPIs
Sources2
  1. Crewhu: MSP Sales Strategy for Growthcrewhu.com
  2. LogMeIn Resolve: Top Ten MSP Performance Metricslogmein.com

Welcome Back

Sign in to your MSP Outpost account.