Staffing Agency Client LTV Calculator

Client LTV for a staffing agency is calculated by taking your average monthly revenue per client, multiplying it by your gross margin percentage to get gross profit, subtracting your overhead costs over the length of the relationship, and adjusting for any VMS or MSP fees if applicable. You then add the value generated by clients they refer to you. This calculator does all of that automatically based on your inputs, and separates temp and perm models since they generate revenue in fundamentally different ways.

The maximum you should spend to acquire a new client is your client LTV divided by three. This keeps your LTV to CAC ratio at the 3:1 minimum for a sustainable BD program. Most staffing agencies either significantly underspend on BD because they do not know their LTV, or overspend because they have no ceiling to benchmark against. Calculating your LTV first gives you a defensible number to build your BD budget around.

Temp and contract staffing generates recurring weekly spread revenue for as long as workers remain on assignment. LTV in this model compounds with the number of workers placed and the length of the client relationship. Permanent placement generates one-time fees per hire, so LTV depends on how frequently a client returns for additional placements. A perm client who places four to six roles per year is often worth more than it appears at first glance once repeat placement frequency is factored in.

Vendor Management System and Managed Service Provider fees typically run 2 to 5% of your gross margin on VMS-sourced business. On the surface this seems small, but compounded across a client lifetime it can reduce LTV by 10 to 20% on affected accounts. Agencies with a high percentage of VMS business should model this impact explicitly before making BD investment decisions, since the economics of winning and servicing VMS clients are meaningfully different from direct relationships.