Customer Lifetime Value (LTV)

Total revenue expected from a customer over their entire relationship

FinanceMarketingCustomer SuccessSaaS / SoftwareE-commerce / RetailCurrencyQuarterly

FORMULA

LTV = Average Revenue Per User × Gross Margin % × Average Customer Lifespan

Alternate Calculations

From ChurnARPU × Gross Margin % / Monthly Churn Rate
SimpleAverage Revenue Per Customer × Average Customer Lifespan (months)

What is Customer Lifetime Value?

Customer Lifetime Value (LTV or CLV) estimates the total revenue a business can expect from a single customer account throughout the entire business relationship. It helps companies understand how much they can afford to spend on acquisition while remaining profitable. LTV is often compared with CAC to evaluate unit economics. A healthy LTV:CAC ratio is typically 3:1 or higher.

Chart

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— · Customer Lifetime Value

Required Data Columns

Average Revenue Per UserGross Margin %Average Lifespan (months)