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What is Lifetime Gross Profits (LTGP) & The Formula

Lifetime Gross Profits (LTGP) is the total gross profit generated by a customer throughout their entire relationship with a company, before deducting any expenses.

Why is Lifetime Gross Profits (LTGP) important?

Lifetime Gross Profits (LTGP) is important because it provides a comprehensive view of a customer's total contribution to a company's revenue, helping inform customer acquisition and retention strategies.

An easy way to understand Lifetime Gross Profits (LTGP)

Think of it as the total amount of money a customer spends on a company's products or services throughout their entire relationship with the business, before subtracting any costs.

The Formula of Lifetime Gross Profits (LTGP)

LTGP = Average Gross Profit per Transaction × Average Number of Transactions per Time Period × Average Customer Lifespan

For example: If the average gross profit per transaction is $50, the average number of transactions per year is 4, and the average customer lifespan is 5 years, then the LTGP would be: $50 × 4 × 5 = $1,000

At Kosme Aesthetics we analyze Lifetime Gross Profits on treatments and products that not only have the highest client satisfaction rates but also contribute significantly to our overall profitability.

This strategic focus allows us to allocate resources more effectively, ensuring that we invest in services that both delight our clients and drive our clinic's financial health.

Tailoring our offerings based on Lifetime Gross Profits insights has resulted in a more loyal client base, increased repeat business, and an enhanced ability to introduce lucrative new services confidently.

Frequently Asked Questions

What is Lifetime Gross Profits (LTGP) and how is it calculated?

How does LTGP differ from Lifetime Value (LTV)?

Why is tracking LTGP important for businesses?

How can businesses increase their Lifetime Gross Profits?

What factors influence Lifetime Gross Profits?

How do customer acquisition and retention strategies affect LTGP?

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