The gross profit a customer generates over their whole relationship with you.
For subscriptions: monthly profit per customer ÷ monthly churn. Retention quietly dominates the number — halving churn doubles LTV without touching price.
Formula: LTV = Monthly Profit ÷ Churn Rate
Example: $85/mo × 70% margin ÷ 3% churn ≈ $1,983 LTV.
FAQ
What is Customer Lifetime Value in simple terms?
For subscriptions: monthly profit per customer ÷ monthly churn. Retention quietly dominates the number — halving churn doubles LTV without touching price.
How is it calculated?
LTV = Monthly Profit ÷ Churn Rate. Example: $85/mo × 70% margin ÷ 3% churn ≈ $1,983 LTV.