Definition
The average amount of money each of your customers pays during their engagement with your company.
It is calculated by dividing the current average recurring revenue per customer by the estimated churn rate. If you use monthly recurring revenue, use the monthly churn rate. If you use annual recurring revenue, use annual recurring revenue. Example:
- You have €800’000 Annual Recurring Revenue and 40 customers
- Each customer is paying on average €800’000 / 40 = €20’000 every year
- Your average annual churn rate is 5%
- Your ACLV is €20’000 / 5% = €400’000