What is LTV (Lifetime Value)?
The total revenue you can expect from a single customer over the entire time they remain a customer.
Why It Matters
LTV helps you understand how much you can afford to spend on acquiring and retaining each customer.
Real-World Example
A customer paying $50/month who stays for an average of 24 months has an LTV of $1,200.
“Understanding terms like LTV (Lifetime Value) matters because it helps you have better conversations with developers and make smarter decisions about your software. You do not need to be technical. You just need to know enough to ask the right questions.”
Related Terms
CAC (Customer Acquisition Cost)
The average cost of acquiring a new customer, including marketing and sales expenses.
Churn Rate
The percentage of customers who stop using your product or cancel their subscription in a given period.
MRR (Monthly Recurring Revenue)
The predictable revenue your business earns each month from active subscriptions.
ARR (Annual Recurring Revenue)
The predictable revenue your business earns per year from active subscriptions, typically MRR multiplied by 12.
From definition to deployment
Knowing the term is step one. Using it in something real is the rest.