Not all clients are created equal. Some bring in steady income and long-term value, while others demand significant time and resources but deliver little profit. Yet, many small business owners focus solely on revenue without tracking the true cost of winning and servicing each client. That’s where the Customer Value Calculator comes in.

Developed by Chartered Accountant James Scott of JD Scott + Co, this tool helps small business owners uncover the hidden costs of client acquisition and make smarter pricing, marketing, and business decisions.

“Client acquisition comes at a steep price — you often have to lose money before you start making it,” says James. “When you look at the economics of a business, you have to ask: Will this client be profitable in the long run?”

By breaking down marketing and sales expenses, onboarding time, and revenue potential, the calculator gives a clear financial picture of each client’s true value.

Why tracking customer acquisition costs matters

Small business owners are often too busy winning new work to step back and ask:

  • How much time and money does it actually take to bring in a new client?
  • Are some clients more expensive to service than they’re worth?
  • Could pricing adjustments or marketing tweaks increase profitability?

Without tracking customer acquisition costs (CAC), it’s easy to assume that a high-revenue client = a profitable client — when the reality may be quite different.

Example: The true cost of acquiring a client

James recalls working with a recruitment firm that focused on signing new clients but had no clear understanding of acquisition costs.

“They had five new clients and celebrated, but when I asked, ‘What did it actually cost you to bring them on?’ they didn’t have an answer,” says James.

After using the Customer Value Calculator, they realised marketing, advertising, and time spent onboarding each client added significant costs — so much so that some clients were costing more to acquire than they were worth.

“Even if a client brings in $10,000, you need to ask: How long will they stay? Is it a one-off? What did it cost to get them on board?” says James.

Who should use the Customer Value Calculator?

Any business that invests time and resources into winning and servicing clients can benefit from this tool.

“If you want to run a business — not just have a job — you need to know your numbers,” says James. “Understanding your customer acquisition costs is critical to making real profits.”

Industries that gain the most value include:

  • Tradies, professional & service businesses – Ensure quotes cover acquisition and operational costs.
  • Recruitment & consulting firms – Track CAC vs. long-term client value.
  • Freelancers & agencies – Set sustainable pricing and avoid undercharging.
  • SaaS businesses – Measure customer lifetime value (CLV) based on subscription models.

How customer value is measured differs by industry:

  • Professional Services & Tradies: CLV is driven by capacity and staff costs. Profitability depends on maximising billable hours, improving efficiency, and retaining clients for longer. Staff wages are typically the biggest expense.
  • SaaS Businesses: CLV is based on recurring revenue and churn rate. Profitability comes from keeping customers subscribed, reducing churn, and lowering customer acquisition costs. Since software scales easily, growth is about adding more users without a big jump in costs.

How to calculate customer value in four steps

Our Customer Value Calculator has two versions — one for Professional Services and another for SaaS and subscription-based businesses. Choose the one that fits your model and follow these steps:

For Professional Services and Tradies: Maximising billable time & efficiency

1. Calculate what your time is worth

  • Enter your weekly working hours
  • Input annual salary, superannuation, bonuses, and profit shares
  • Calculate total salary costs
  • Determine your effective hourly rate (Total Salary Cost ÷ Total Hours Worked)

2. Track time spent acquiring and servicing clients

  • Use CRM tools or estimate time spent on sales, meetings, client onboarding, and service-specific tasks
  • Sum up the total hours per client

3. Work out revenue per client

  • Choose a revenue model:
    • Hourly Rate – Revenue based on billable hours
    • Fixed Fee – Pre-agreed pricing per project or service
    • Retainer – Ongoing service fees over a set period
  • Enter the expected revenue per client

4. Calculate profit per client

  • Subtract total costs from revenue
  • Determine profit per hour
  • Calculate leveraged profit, factoring in owner involvement:
    • Profit before owner costs
    • Owner’s time spent on the job
    • Final leveraged profit per hour

For SaaS Businesses: Focusing on recurring revenue & churn rate

1. Calculate the cost to acquire each customer (CAC)

  • Add up all marketing, sales, and onboarding costs
  • Divide by the number of new subscribers acquired in that period
  • CAC = Total Acquisition Cost ÷ New Customers

2. Determine Average Revenue Per Account (ARPA)

  • Take your total Monthly Recurring Revenue (MRR)
  • Divide by the total number of active users/subscribers
  • ARPA = Total MRR ÷ Number of Active Customers

3. Calculate Customer Lifetime Value (CLV)

  • Use the formula: CLV = ARPA ÷ Churn Rate
  • Identify:
    • New customers per period
    • Lost customers per period
    • Churn rate (% of customers lost per period)

4. Calculate Profit Per Account

  • Use the formula: Profit Per Account = CLV – CAC
  • Determine the Customer Acquisition Cost Ratio by comparing CLV to CAC

Start using a Customer Value Calculator to grow your business today:

Download the CVC for Professional Services & Tradies

Download the CVC for Saas

Overcoming common objections: ‘Not enough time or data’

One of the best ways to track and reduce customer acquisition costs is by reviewing your numbers regularly. Many business owners hesitate to do this because they feel too busy or assume they don’t have enough data. “The information is already there — it’s in your CRM, sales records, and invoices,” says James. “You just need to build the habit of reviewing it regularly.”

James worked with a trades business that spent hours quoting jobs — driving to client sites, preparing estimates, and following up — without charging for it. “A tradie might spend two or three hours on a quote, but if they only win one in three jobs, that’s nine hours of unpaid work. They need to build that cost into their pricing,” says James.

By setting aside just one hour per month to analyse your acquisition costs, you can spot inefficiencies, refine pricing, and ensure you’re focusing on the right clients. Small adjustments — like increasing client retention, streamlining onboarding, or adjusting marketing spend — can significantly improve profitability over time.

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