Customer Embedded Value

The 5-minute CEV calculator

A deliberately rough estimate of what your current customer base might be worth before future growth. Useful as a doorway, not a valuation opinion. The real work starts when the number is large enough to make you uncomfortable.

Inputs

Active customers Monthly ARPU / spend Annual retention % Gross margin % Gross, before cost-to-serve — servicing cost is taken off separately below, so don't fold it in here as well. Cost-to-serve % Subtracted from gross margin above, so the two don't overlap. Net margin here = 22% − 17% = 5% of revenue. Discount rate %

Defaults — fine to leave as they are

Prudence haircut % A simple prudence buffer — it just shaves this % off the value (at 6% you bank about 94% and hold the rest back, because customers rarely behave exactly as assumed). Higher = more conservative. This is a plain haircut, not a SAM cost-of-capital risk margin. Projection years How many years of the current base to value. Ten is a sensible horizon for a rough, in-force view.

A pre-tax, in-force estimate. It ignores future new customers, segment migration, mortality, detailed overhead allocation and competitive constraints.

Rough in-force CEV (pre-tax)

Enter assumptions and calculate.

Value / customer R0

Revenue multiple 0.0x

PV profit before risk R0

Retention sensitivity

Want it modelled properly? Talk to i²

The 5-minute number is the doorway. A full Customer Embedded Value engine adds new-business value, segment migration, retention curves and a proper risk margin — the version that survives a board reading it line by line.

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