LTV/CAC for service businesses in 2025: the honest formula
Service firms often log LTV from revenue and CAC from paid media only. The model ends up 2–3× off. Here is how we reconciled the numbers for a mid-size interior design studio, Liniya Dom.
Creastra Digest
- Build LTV on gross margin, not revenue — in services that is a 40–60% gap
- Include sales salaries and software in CAC or you understate it by ~35%
- A healthy LTV/CAC band for services is 3.5–5; below 3 you lose money within 12 months
When interior-design studio Liniya Dom came to us in August 2024, their dashboard showed a 680,000 ₽ LTV and a 42,000 ₽ CAC. On paper: payback in 1.5 deals and champagne on ice. Two weeks of reconciliation turned those into 214,000 ₽ LTV and 71,000 ₽ CAC. The difference is the line between «scale up» and «rework the budget».
Why service companies deceive themselves
In e-commerce, LTV is almost automatic: orders in the CRM, cost of goods in the ERP, refunds in a module. In services, it is manual work: long projects, advances and final payments split across months, subcontractors, retention driven by word-of-mouth. Adding up 24 months of invoices and dividing by client count yields an average you cannot act on.
The formula we use
We compute margin-based LTV per cohort. Take every client acquired in a given month, sum closed projects over 18 months, subtract direct cost of delivery (contractors, materials, logistics), divide by the cohort size. That is a defensible number you can plan from.
-- Postgres: margin-based LTV by acquisition cohort
SELECT
date_trunc('month', c.first_deal_at) AS cohort,
count(*) AS clients,
sum(d.revenue - d.direct_cost) / count(*) AS ltv_margin
FROM clients c
JOIN deals d ON d.client_id = c.id
WHERE d.closed_at <= c.first_deal_at + interval '18 months'
GROUP BY 1
ORDER BY 1;What people forget to put into CAC
- Sales team salaries (up to 40% of CAC in services)
- CRM, telephony, email-tool licences
- In-house marketer and content contractors
- Discounts and bonuses on the first deal — also an acquisition cost
- Referral fees and partner commissions
At Liniya Dom, three lines were missing from CAC: two 85,000 ₽ sales managers, the amoCRM and attribution stack, and a 7% first-project discount booked under marketing. Add those back and CAC moved from 42,000 ₽ to 71,000 ₽ — before accounting for the owner's time on client calls.
A healthy LTV/CAC band
For services with average tickets of 150,000–500,000 ₽ we target 3.5–5. Above 5 you are under-investing in marketing and leaking market share. Below 3 the model does not survive a seasonal dip and will start eating working capital within a year.
When the band collapses
- Drill sources to campaign level and keep only the top three by margin
- Raise average tickets with «design + supervision + procurement» bundles
- Launch a 4%-of-margin referral programme
- Shorten cycle time: a site calculator cut contract time from 22 days to 9
- Lean into retention — decor upsells six months after handover
When to split CAC by segment
If you have two segments — B2C flats and B2B offices — a blended CAC is useless. We separate CAC by segment once annual turnover crosses 25M ₽. At Liniya Dom, B2B came in at CAC 118,000 ₽ and LTV 612,000 ₽ — payback on the second deal. B2C: CAC 64,000 ₽, LTV 187,000 ₽ — payback at 4.2 projects. Two different businesses, two different plans.
Embedding the calculation into management rhythm
Numbers should hit the owner's desk once a month — no more, no less. Weekly is noise, quarterly is late. We assemble a Metabase dashboard on Postgres: 40 minutes of manual refresh at the start of the month, automated after that.
Six months into the new model, Liniya Dom grew margin by 38% on the same ad budget — not because of a magical channel but because they stopped averaging and started making decisions on real numbers.