Metrics & Performance
LTV (Lifetime Value)
The total revenue a business expects to earn from a customer over the entire duration of the relationship.
Lifetime Value (LTV or CLV — Customer Lifetime Value) is the total expected revenue from a single customer throughout their relationship with the business. For a SaaS business: LTV = Average Revenue Per User (ARPU) × Gross Margin % / Monthly Churn Rate. Example: $500 MRR per customer × 80% gross margin / 2% monthly churn = $20,000 LTV. The critical ratio is LTV/CAC (Customer Acquisition Cost). A 3:1 ratio is often cited as the minimum for a healthy SaaS business; 5:1 or higher is excellent. Low LTV/CAC (<1:1) means you're spending more to acquire customers than you'll ever earn from them — a business that cannot scale. Improving LTV comes from reducing churn, increasing prices, or expanding per-customer revenue.