← Glossary Marketing

LTV (Lifetime Value)

The total revenue (or profit) a customer generates over the entire time they're a customer.

Explained simply.

LTV is how much a customer is worth to you, forever. Simple calculation: average monthly revenue × average customer lifespan in months (or: revenue / churn rate). If customers pay $100/mo and stick around 24 months on average, LTV = $2,400. Sometimes calculated on revenue, sometimes on gross profit (margin-adjusted LTV is more honest).

An example.

Your SaaS: $100/mo revenue per customer, 3% monthly churn (so ~33-month average lifetime). LTV = $3,300 revenue, or ~$2,500 gross profit at 75% margins. That's how much you can afford to spend acquiring a customer.

Why it matters.

LTV is the ceiling on what you can spend to get a customer. Spend more than LTV and you lose money on every sale. High-LTV businesses can afford aggressive acquisition; low-LTV businesses can't. This is the core math of customer-based businesses.