Customer lifetime value

Customer lifetime value (LTV) is the total recurring revenue (or gross profit) expected from a customer over the duration of the customer relationship, calculated using the customer’s average revenue and expected retention period. LTV is a forward-looking estimate based on historical retention patterns and unit economics.

LTV is the second half of the LTV-to-CAC ratio used to assess unit economics in subscription businesses. Definitions vary: gross LTV uses revenue, net LTV uses gross profit (revenue minus cost of service), and discounted LTV applies a discount rate to future cash flows.