Customer Lifetime Value (LTV or CLV) is the total revenue (or profit) a business generates from a single customer over the entire duration of their relationship. It is a key metric for subscription and e-commerce businesses.
LTV = MRR × Gross margin ÷ Churn rate
MRR: $200 · Margin: 70% · Churn: 5%/mo
LTV = 200 × 0.70 ÷ 0.05 = $2,800
Calculate it yourself
Use the Customer LTV calculator.
LTV:CAC — the golden ratio
The LTV:CAC ratio is the most important indicator of business model health. Golden zone: LTV:CAC = 3–5.