Lifetime Value (LTV)

Written By Landon Howell

Lifetime Value (LTV) is a metric that measures the amount of revenue a startup can expect to generate from a single customer over the entire duration of their relationship.

This metric is used to estimate the long-term profitability of a customer and is a valuable tool for assessing the overall health of a startup's business model.

How to calculate Lifetime Value (LTV)

Average Revenue Per Account (ARPU) / Customer Churn Rate = Lifetime Value (LTV)

LTV can inform decisions about pricing strategies, customer retention initiatives, and other business strategies.

Startups with high LTV values are typically seen as more successful and sustainable, as they generate more revenue from each customer and have a better chance of achieving long-term profitability.

Startups with high LTV can also demand higher CAC.

Landon Howell
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