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.
Related metrics terms
ARR (Annual Recurring Revenue)
Annualized value of your subscription revenue at a point in time.
MRR (Monthly Recurring Revenue)
Monthly equivalent of ARR, useful for month-over-month tracking.
Net Revenue Retention (NRR)
Revenue from your existing customer base 12 months later, including expansion and churn.
Gross Revenue Retention (GRR)
NRR without upsell — what you keep before expansion.
See this in action
Insights 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 directly affects fundraising readiness, financial decision-making, or operational discipline at the stage where mistakes are expensive to undo. Founders who understand it have a meaningfully easier time in 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 daily 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.
Got a finance question that needs more than a definition?
Talk to a real CFO. 30 minutes, no contract, free.
