Metrics
LTV (Lifetime Value)
Quick definition
Total gross profit a customer generates over their lifetime.
LTV = ARPU × Gross Margin / Churn Rate. The right LTV uses gross margin (not revenue) and a churn rate measured on the same cohort. LTV/CAC above 3x is a rule-of-thumb minimum for a healthy SaaS business.
See this in action
Insights, guides, and tools where LTV (Lifetime Value) shows up.
Frequently asked questions
- What is LTV (Lifetime Value)?
- LTV = ARPU × Gross Margin / Churn Rate. The right LTV uses gross margin (not revenue) and a churn rate measured on the same cohort. LTV/CAC above 3x is a rule-of-thumb minimum for a healthy SaaS business.
- Why is LTV (Lifetime Value) important for startups?
- LTV (Lifetime Value) is a metrics concept that matters for startup founders because it shows up in fundraising readiness, financial decision-making, and operational discipline at the stage where mistakes are expensive to undo. Founders who understand it are better prepared for diligence, board meetings, and investor conversations.
- What category does LTV (Lifetime Value) belong to?
- LTV (Lifetime Value) is a Metrics term in the StartupCFO finance glossary, alongside other metrics concepts that founders, CFOs, and accountants use in startup operations and reporting.
- Where can I learn more about LTV (Lifetime Value)?
- Beyond this definition, see the related metrics terms below, or explore StartupCFO's insights and tools that put LTV (Lifetime Value) in context. For specific situations, talk to a fractional CFO who can walk through your numbers.
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