Strategy & economics
LTV (Customer Lifetime Value)
Also known as: customer lifetime value · CLV · lifetime value
The total contribution a customer produces across their relationship with the business, typically computed as (ARPU × gross margin) ÷ monthly churn rate for subscription models.
LTV answers: how much contribution margin does a customer produce, in total, before they churn? For a subscription business the canonical formula is (ARPU × gross margin) ÷ monthly churn rate — which gives the expected revenue contribution over the customer's expected lifetime. Gross margin matters: raw ARPU overstates LTV because it ignores COGS. LTV is usually paired with CAC to produce an LTV:CAC ratio — 3× is the operator-benchmark threshold for a healthy acquisition model, 5× is strong. Lifecycle programs exist primarily to move LTV upward: every percentage point of monthly churn you remove compounds into a permanent LTV lift that acquisition tuning alone can't match.
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