Member Lifetime Value Calculation

Are you running your gym - or is it running you? Behind every thriving health club is a mastery of margins, member behavior, and smart reinvestment. Use these stats as a quick benchmark to stress-test your business model and spot growth opportunities. 1. Average profit margins: Traditional gyms see 10–15% net profit; boutique studios often achieve 20–40%. 2. Average annual revenue per gym: Approximately $846,827 in the U.S. 3. Average EBITDA margins: 22.7% across both gyms and studios. 3. Average startup cost: Around $610,000, depending on location, size, and business model. 3. Cardio equipment lifespan: 5–7 years for treadmills and ellipticals, 7–10 years for stationary bikes. 4. Strength equipment lifespan: 8–12 years for cable machines, 15–20 years for free weights. 5. Recommended capital reinvestment: Allocate at least 6% of annual revenue for equipment and facility upgrades. 6. First-year attrition: Up to 50% of new members leave within six months. Retention rates: Traditional gyms average 60.6%, while boutique studios can reach 75.9%. 7. Onboarding impact: A structured onboarding program can improve six-month retention from 60% to 87%. 8. Average revenue per member: $165/month in standard gyms; $400+ in high-performing studios. 9. Member lifetime value: A $165/month member staying 3.3 years has an LTV of $6,534. 10. Revenue per member metric: A gym with $20,000 in monthly revenue and 500 members yields $40 per member. 11. Global membership growth: Health club memberships are projected to surpass 230 million globally. 12. Strength training trend: Gyms are repurposing floor space from cardio to strength and functional training. 13. Boutique Fitness Studio Market Size: The global boutique fitness studio market was valued at approximately $47.94 billion in 2023 and is projected to reach $85.90 billion by 2030, growing at a compound annual growth rate (CAGR) of 6.82% 14. Average monthly membership fees: Around $58 for traditional gyms, $90 for boutique studios. 15. Visit frequency: Average member visits 94 times annually (about 1.8 times per week). 16. Retention profitability link: Increasing retention by 5% can boost profits by 25% to 95%. 17. Personal Training Penetration Rate: In traditional health clubs, only about 3% to 5% of members utilize personal training services. However, with strategic initiatives, clubs can aim to increase this rate to 10% or higher 18. Personal Trainer Turnover: The fitness industry experiences a high turnover rate among personal trainers, with approximately 80% leaving the profession within their first year. 19. Marketing Expenditure as a Percentage of Revenue: Gyms typically allocate between 2% and 12% of their total revenue to marketing efforts. This range varies based on factors such as the gym's size, location, and growth objectives. 20. Unused Memberships: Up to 67% of gym memberships go unused - meaning some gyms are technically in the business of hope more than health.

Struggling to Scale? It’s All About CAC to LTV Let me ask you this: Do you actually know your LTV (Lifetime Value)? Most Shopify founders I talk to don’t. They’re scaling blindly, focusing on ROAS or revenue, while CAC (Customer Acquisition Cost) creeps up. But here’s the thing—without knowing your LTV, you’ll never know how much you can actually afford to acquire a customer and scale profitably. Here’s a step-by-step breakdown of how to calculate your LTV using Shopify and cohort analysis: 1️⃣ Start With Shopify’s Sales Reports Go to Analytics > Reports > Customers Over Time in your Shopify admin dashboard. Use this report to find: Average Order Value (AOV): Calculate this by dividing total revenue by the total number of orders. Purchase Frequency (F): Find how often your customers return to buy within a specific time period. Formula: AOV = Total Revenue / Number of Orders F = Total Orders / Total Unique Customers 2️⃣ Track Repeat Purchase Rates Over Time Run a cohort analysis to see how many first-time customers return and how much they spend. Look at: Month 1, Month 3, Month 6 customer retention rates. Spend patterns of customers acquired in specific months. 3️⃣ Calculate Customer Lifetime Value (LTV) Using your AOV and frequency data, apply the formula: LTV = AOV x Frequency x Customer Lifespan If you don’t know the customer lifespan, start with 12–24 months as an estimate for most eCom businesses. Why This Matters Without knowing your CLTV, you’re throwing darts blindfolded when setting budgets and scaling ads. This number directly informs how much you can spend to acquire a customer (CAC) while staying profitable. Want a walkthrough? Comment "LTV" and I’ll send you a step-by-step video guide to crush your numbers.

As ex growth operator, I grew 19x in 2 years, at some point we had so high LTV that we could offer 4 free services for one client (to make using the service a habit) and it would’ve still been profitable. LTV-related findings can be really valuable but can be a painful exercise for an early-stage startup. Let's learn how to calculate LTV for your startup: Lifetime Value (LTV) for a customer or user is the total predicted revenue gained from a single customer account. It is the user’s revenue value times the user's lifespan. As a startup, you don’t actually know how long any given user will stay with your company, so you have to make an educated guess based on your data. First, you don’t want to calculate LTV for every single user. What you want to do is make an average LTV calculation based on the typical user of your company. Using average values gives you a pretty good overall indication of how your company is doing at closing sales and retaining customers. To do that, you start with the average purchase value. If you have 3 plans of different costs, for instance, look at a 1-month span and see how many times a plan was paid for, and then divide the total cost of all those payments by the number of payments. There’s your average purchase value. Then you need to figure out how many of those purchases on average were from one user with multiple of your services (remember, this is an estimate of a single account). Just divide the number of purchases by the number of users who made purchases. This is the average frequency rate.

Checklist of numbers you must know cold 𝗯𝗲𝗳𝗼𝗿𝗲 𝘆𝗼𝘂𝗿 𝗻𝗲𝘅𝘁 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿 𝗺𝗲𝗲𝘁𝗶𝗻𝗴 ──── ➤ 1. Burn Rate (Monthly) How much cash you spend per month. Not "around $50k" — the exact number. Formula: Burn Rate = Total Expenses – Total Revenue (per month) Example: If you spend $120k monthly and make $40k in revenue → Burn = $80k/month. ➤ 2. Runway (Months) How many months left before you run out of money at your current burn. Formula: Runway = Cash in Bank ÷ Monthly Burn Example: $400k cash ÷ $80k burn → 5 months runway. If your answer isn’t sharp and clear, the investor stops listening. ➤ 3. Customer Acquisition Cost (CAC) What it costs you to get one paying customer. Formula: CAC = Total Sales & Marketing Spend ÷ New Customers Acquired Example: $50k in ads + sales spend, 500 new customers → CAC = $100. Investors want to see you track this obsessively, not guess it. ➤ 4. Lifetime Value (LTV) The total revenue a customer brings in over their lifecycle. Formula: LTV = (Average Revenue per Customer per Month × Gross Margin %) × Average Customer Lifespan (in months) Example: $50 ARPU × 80% margin × 12 months = $480 LTV. This number shows whether your business prints money or burns it. ➤ 5. CAC:LTV Ratio The master metric that reveals your growth engine’s efficiency. Healthy SaaS rule of thumb: LTV should be at least 3x CAC. Example: If CAC = $100 and LTV = $480 → Ratio = 4.8 (excellent). ──── Here’s the truth: Most founders drown in pitch decks full of jargon and "vision slides"… but investors cut straight to the math. If you can’t rattle off Burn, Runway, CAC, LTV, and CAC:LTV ratio without blinking, you’re dead in the water. But if you own these numbers, you project competence, discipline, and clarity - the exact traits investors bet on. The next time you walk into a meeting, remember: fundraising is a math test disguised as a storytelling session. Get the math wrong, and the story won’t save you. Get the math right, and even a rough story gets a second meeting. ──── Which of these 5 numbers do you not have memorized right now? ──── Want brutal clarity on your startup? Skip years of wasted effort and stop making expensive mistakes. Get direct advice on your deck, fundraising, GTM, or founder challenges. Book a no-BS 1:1 call with me here: https://lnkd.in/gWV8DT56 💬 Drop your most burning question in the comments. ♻ Repost to save another founder from bombing their investor meeting. 🔔 Follow Anshuman Sinha for more Startup insights. #Startups #Entrepreneurship #VentureCapital #LeanStartups #AngelInvesting