Lifetime Value is the total revenue you expect from a customer over their relationship with your business.

How is LTV calculated?

Common formula: LTV = (Average revenue per customer) × (Retention or purchase frequency) × (Customer lifespan). Variations use churn or repeat rate.

Why is LTV important?

It helps set marketing spend (CAC), pricing, and retention strategies.

Calculate customer lifetime value: revenue per customer and retention (e.g. average order value × purchase frequency × lifespan).

Revenue per customer (e.g. avg order value)

Retention / purchase frequency (e.g. orders per year)

Customer lifespan (e.g. years)

What is LTV?: Lifetime Value is the total revenue you expect from a customer over their relationship with your business.
How is LTV calculated?: Common formula: LTV = (Average revenue per customer) × (Retention or purchase frequency) × (Customer lifespan). Variations use churn or repeat rate.
Why is LTV important?: It helps set marketing spend (CAC), pricing, and retention strategies.

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