How do you factor in customer lifetime value when setting prices? What advice would you give to businesses struggling with this?

Question

Setting the right price for your products or services is a critical business decision that goes beyond immediate profits. This article explores how considering customer lifetime value can transform your pricing strategy, drawing on insights from industry experts. Discover practical approaches to align your pricing with long-term customer relationships, ultimately fostering brand loyalty and sustainable growth.

Andy Hayes · Answer

I don't treat Customer Lifetime Value (CLV) as just a number -- I treat it like a promise. It represents not just how much someone might spend over time, but how much trust and transformation we're responsible for delivering.
So when I'm setting prices, I ask myself:"What is the narrative arc of this customer's journey -- and where does pricing invite them in, stretch them, or reward them?"
Here's what that means in practice:Instead of obsessing over whether my entry point is "cheap enough," I focus on whether it's believable. Does the price make sense for where the customer is in their journey -- not just where I want them to go? If the long-term CLV is high, I'm okay starting with a low-friction, high-trust offer that proves we belong in their future.
Then I layer pricing like chapters:Chapter 1: Low-barrier, fast-win, emotionally satisfyingChapter 2: Expanded access, more depth, more personalizationChapter 3: Community, status, or transformation -- things that are sticky beyond utility
CLV helps me pace that story. And if I'm doing it right, each pricing tier isn't just about features -- it's about signaling, "You're further along now. You're ready for more."
My advice to businesses struggling with this:Don't just ask what a customer is "worth." Ask what experience they'll remember paying for.Pricing isn't just math -- it's memory. If the price feels fair in hindsight (after the outcome), you've nailed it. But if it feels risky in the moment, it means your journey map needs work -- not your price tag.

Nate Banks · Answer

When I factor customer lifetime value into my pricing, I consider a customer who is a sock enthusiast. They start with one pair and somehow accumulate a drawer full of socks, making it look like a confetti cannon exploded in a running shop. That kind of loyalty doesn't happen by accident, and it definitely isn't established on margins so thin they scream, "Please don't return anything." I price for the long term. I understand that if we provide quality, comfort, and colors that hit like a motivational soundtrack at mile five, they'll return for the next set—and probably with friends.
To keep it brief, I take the average repeat customer's spending, multiply it by the number of average repeat customer purchases, and remind myself that panicking about a 20-cent rise in packaging costs isn't the right approach. That figure gives you justification for spending on the experience—improved postage, fun unboxing, and emails written by someone who has had caffeine and is aware of socks.
For any company struggling with this, my recommendation is to picture your customer as a sitcom character who keeps coming back. You wouldn't make them a one-act investment. You'd give them more substantial lines, better wardrobe, and maybe even a whole spin-off. Looking at the big picture, get your prices right, and please, for your own sake, stop trying to be the dollar bin. You're building a brand, not selling socks in a back alley.

Todd Bingham · Answer

A little strange, but I think of CLV in cookouts.
We sell fences, so people are buying privacy for Sunday barbecues, safety for their kids, and the peace of mind that comes from knowing the dog won't make a run for it. That emotional value doesn't show up in CLV formulas, but it does show up when we get repeat calls from the same families--first for the backyard, then for the pool, then when they move homes and start again.
So, we price like we expect to see them again. We don't race to the bottom, but we aim for a price that supports an exceptional experience, one worth repeating and referring. 
We'd rather invest in the relationship than squeeze every dime out of a single transaction. 
So, stop thinking of CLV as a number and start thinking of it as a narrative. Who will this customer be five years from now? Are they still with you? Did you make them proud to choose you? When you get that right, pricing becomes less about margins and more about momentum.

Mikey Moran · Answer

Price-wise, I always look at Customer Lifetime Value (CLV) as the long-term perspective--essentially like dating. You don't plan the entire relationship after one date at a coffee shop, right? Business isn't different. Private Label Extensions doesn't price to win the initial sale--we price to create a long-term feeling in the customer.
Suppose someone is going to reorder bundles monthly, refer friends, and potentially begin an entire private label line with us someday in the future. If I intimidated them away with out-of-sight initial prices just to gain an extra five dollars, I'd be jumping over a lifetime customer to gain a short-term tip.
So we price so that the first sale is essentially a no-brainer. Sometimes that requires more tightly packed margins upfront, but greater payouts in the long run--because once they're in and realize how easy we make it, they're not leaving.
My recommendation to companies?Stop selling like a one-night stand. Think relationship--not transaction.
Know your numbers. If CLV is alphabet soup to you, get familiar. It's the growth playbook for sustainability.
Invest in that first impression. Make it simple, enjoyable, and high-value. If the first purchase is a success, the second one's already half-sold.
Price for the endgame. Price it right, and they won't just buy once--they'll buy again, refer their friends, and cast you as the lead character in their business saga.

Gillian Bell · Answer

We never price just for the first purchase--we price for the relationship. At Comfrt, LTV is baked into every pricing decision. If a product brings someone into the brand, we ask: will it lead to a second, third, or fourth order? If yes, we're more flexible on margin upfront because we know the long game pays off.
For businesses struggling with this: stop obsessing over individual transaction profit and start mapping out customer behavior. What do your best customers buy next? How soon do they return? If you know your LTV, you can price more strategically, spend smarter on acquisition, and build loyalty instead of one-time wins. Pricing isn't just math--it's a bet on trust and future value.

James Kell · Answer

A lot of our students start out with a week-long adventure in the BVI, then return for advanced courses, private trips, or even to charter with friends they met on the boat later on.
So, when setting prices, we think about that entire arc. We might break even or even take a loss on the first course because we've seen the long-term value of creating an unforgettable first experience.
For businesses struggling with CLV, our advice is to zoom out. Stop pricing for the transaction and price for the relationship.
What does success look like after the first sale? Are you creating experiences, products, or services that people want to return to or share with others?
Make it super easy for customers to stick around. For us, that means tight community-building. We've got WhatsApp groups, reunions, inside jokes, and mutual respect.
Once you start thinking of your customers less like one-time buyers and more like future advocates who are just starting with you, your pricing strategy will become clearer.

Nathan Mathews · Answer

Everything we price is based on repeatable systems. A single $12,000 roof might look like a win, but we do not get excited unless that customer converts into a second property referral or clicks into a solar upsell funnel. We use a 3-tier model—immediate value, year-one cross-sell, and year-three referral path. So our AI assigns a CLV score based on home age, local hail history, and roof type. It is boring math, but it tells us if we can afford to offer a $400 discount or not.
Advice? Start pricing for the second transaction, not just the first. We ran a test where leads tagged as "2X Potential" were given next-day drone scans plus a free gutter clean worth $180. Those leads converted 38% more often and booked faster. In which case, over-indexing on CLV is not optimism—it is operational logic.

Jeff Burke · Answer

Customer lifetime value drives long-term thinking. In real estate, you don't build a career by chasing one transaction. You build it by earning trust, delivering results, and staying top of mind through every stage of life: first homes, growing families, downsizing, and investment properties. One client served well often leads to ten more over time. When I think about pricing, I don't just weigh margins—I factor in the future relationship and the referrals that come from doing the job right.
Businesses that struggle with pricing often focus too much on short-term revenue. They cut corners to stay competitive, forgetting that today's savings can cost tomorrow's loyalty. You don't need to be the cheapest if you deliver what people can't get anywhere else: trust, consistency, and a real commitment to outcomes. In my business, service is the product. Pricing reflects not only what it takes to get the job done but to do it with excellence every time.
You need systems to measure repeat business and referral volume. Look at where your best leads come from and track the full arc of those relationships. If you're not tracking, you're guessing. I've worked with families for decades. That doesn't happen unless you put people first. When you do, lifetime value takes care of itself—and your pricing reflects your real worth, not just your cost.

Chris Putrimas · Answer

When we set prices, we don't just consider the first sale—we think about the next five. For us, customer lifetime value (CLV) is key. If I know someone who buys a teak dining set is likely to return for lounge chairs, umbrellas, or accessories in a year, I can afford to keep margins a little tighter upfront. This is where loyalty and careful follow-up are essential.
For businesses struggling with this, my advice is to stop treating every sale like it's a one-time win. Look at buying patterns, follow up with value—not just offers—and focus on delighting customers, not just selling to them. A happy customer today is a repeat buyer tomorrow.

Hone John Tito · Answer

When setting prices, I have learned that it is not just about covering costs but about aligning the price with the customer experience. Game hosting demonstrates the inefficacy of using monolithic pricing methods for customer acquisition. Companies should provide adjustable pricing models with basic packages flexible enough to accommodate rising customer numbers to maintain lasting customer commitment. It's not just about attracting customers with a low entry point, but ensuring they feel the value over time. This approach has helped increase our customer retention by 30% year over year.
For businesses struggling with CLV, the common mistake I see is locking customers into rigid pricing that doesn't adapt as their needs evolve. Regularly reassessing your customer base and their pain points is critical. Pricing needs to evolve as your service does. If you are not actively listening to customer feedback and adjusting accordingly, you are missing out on valuable opportunities to extend their lifetime with your brand.

Dan Grigin · Answer

We restructured our entire pricing strategy after analyzing the lifetime value patterns of Elephant Floors customers who typically return for multiple projects over a 7-15 year homeownership period. Rather than maximizing margins on initial purchases, we offer first-time customers our "Foundation Package," which includes premium installation at standard rates if they purchase our mid-tier flooring products. This creates a quality experience that generates referrals and future business--the true revenue drivers. Our analysis showed that customers who were "wowed" by their first installation experience returned for an average of 2.3 additional projects and referred 4.7 new customers.
For businesses struggling with pricing based on lifetime value, I recommend starting small: identify your top 20 long-term customers and meticulously map every interaction and purchase, looking for the initial experience that converted them from one-time buyers to loyal customers. Then restructure your pricing to optimize for creating that specific experience, even if it means accepting lower margins on initial transactions.

How to factor in customer lifetime value when setting prices?

Table of Contents

How to factor in customer lifetime value when setting prices?

Price for Customer Journey, Not Just Numbers

Build Brand Loyalty Through Strategic Pricing

Price Like You’re Hosting a Recurring Cookout

Create Long-Term Value with Smart Initial Pricing

Map Customer Behavior for Strategic Pricing

Price for Relationship Arc, Not Single Sale

Use Data-Driven CLV to Guide Pricing

Focus on Trust and Outcomes in Pricing

Think Long-Term When Setting Product Prices

Align Flexible Pricing with Customer Experience

Optimize First Impression to Maximize CLV

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