LTV (Lifetime Value)
The total revenue a customer generates while they remain a customer — the metric that defines how much you can spend to acquire them.
Also known as: ltv · lifetime value · customer lifetime value · what is ltv · customer lifetime value
Try CRPRO free for 7 daysLTV (Lifetime Value) is how much a customer is worth in total, from the first payment until they stop buying.
The formula
In recurring revenue:
$$LTV = average\ ticket \times \frac{1}{churn\ rate}$$
If the customer pays R$ 200/month and monthly churn is 5%, they stay for about 20 months on average — an LTV of R$ 4,000.
The more honest version uses margin, not revenue: if gross margin is 70%, that customer's real LTV is R$ 2,800. Working with gross revenue inflates the metric and makes it look like you can spend more on acquisition than you actually can.
The calculation that matters: LTV / CAC
LTV on its own decides nothing. It exists to be compared against CAC:
- < 1 — every new customer is a loss.
- ≈ 3 — the usual benchmark for a healthy business.
- well above 3 — generally means investing too little in acquisition, not excellence.
Payback, which almost nobody looks at
A high LTV with a long payback can still break the business. If a customer generates R$ 4,000 over 20 months, but cost R$ 1,500 to acquire and only returns that in month eight, every new sale consumes cash for eight months. Growing fast in that scenario speeds up running out of money.
The cheapest lever
Since LTV is inversely proportional to churn, reducing cancellations raises LTV without spending an extra dollar on marketing — and, as a result, makes a CAC acceptable that was not before. It is almost always cheaper than chasing more customers.
Frequently asked questions
What is LTV?
Lifetime Value: the total revenue a customer generates while they remain a customer. It defines how much the business can spend to acquire them.
How do I calculate LTV?
In recurring revenue, average ticket divided by the period's churn rate. With 5% monthly churn and a R$ 200 monthly fee, the customer stays for about 20 months and LTV is R$ 4,000. Using margin instead of revenue gives the honest number.
What is the ideal ratio between LTV and CAC?
About 3 to 1. Below 1, every customer is a loss; well above it usually signals underinvestment in acquisition.
Does a high LTV mean the business is doing well?
Not on its own. If the payback is long, every new sale consumes cash for months — and growing fast in that scenario speeds up running out of money instead of solving it.
Related pages
Related glossary terms
CAC (Customer Acquisition Cost)
How much it costs, on average, to win a new customer — the sum of marketing and sales spending divided by the number of customers acquired in the period.
Churn
The percentage of customers or revenue lost in a period — the metric that measures how much of the base slips away while the business tries to grow.
Average ticket
The average amount spent per order or per customer in a period, calculated by dividing revenue by the number of sales.
NPS (Net Promoter Score)
A loyalty metric calculated from the 0-to-10 question about the likelihood of recommending, subtracting the percentage of detractors from promoters.