Calculators › Commission & Agency

Client Lifetime Value Calculator

Calculate the lifetime value of an insurance client from premium, commission, margin, retention and discount rate.

How the client lifetime value calculator works

Client lifetime value tells you how much a new client is worth over the whole relationship — and therefore how much you can afford to spend acquiring one.

Formula

CLV = Annual profit × (1 + d) ÷ (1 + d − r), where r is retention and d the discount rate.

How to use it

1. Enter average annual premium and commission rate.
2. Enter your profit margin after servicing cost.
3. Enter retention and discount rate.

Worked example

$4,200 premium at 13% commission and 35% margin is $191 profit a year; at 88% retention and 8% discount the CLV is about $1,032.

Frequently asked questions

Why use a discount rate?

Money received years from now is worth less today; discounting makes CLV comparable with acquisition cost.

How much should I spend to acquire a client?

A common rule is no more than a third of CLV.

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• Producer Break-Even Calculator — Calculate how many new accounts a producer must write to cover their cost, including renewal commission over several years.
• Insurance Agency Valuation Calculator — Estimate an insurance agency’s value with revenue and EBITDA multiples, discounting contingent income.