# What is LTV? Definition & Technical Mechanics

> **Source:** [SPIDITS AI Startup & Venture Intelligence Glossary](https://spidits.com/startup-glossary)  
> **Category:** Metrics  
> **Canonical Citation:** [https://spidits.com/startup-glossary/ltv](https://spidits.com/startup-glossary/ltv)

## Definition
LTV (Lifetime Value) is the total net revenue a startup expects to earn from a single customer over the entire duration of their relationship.

## Architectural Mechanics & Deep Dive
LTV (Lifetime Value) is the total net revenue a startup expects to earn from a single customer over the entire duration of their relationship. In subscription models (SaaS), it is calculated by dividing the average revenue per account (ARPU) by the customer churn rate. LTV helps founders determine how much they can afford to spend on acquiring new customers while remaining profitable.

## Industry Applications & Real-World Use Cases
Customer value projections and SaaS financial audits

## Frequently Asked Questions

### How is LTV calculated in SaaS?
LTV = Average Revenue Per Account (ARPU) / Customer Churn Rate.

### How can a startup increase its LTV?
By lowering churn, increasing pricing, cross-selling additional products, and extending contract lengths.

## Related Terminology
- [cac](https://spidits.com/startup-glossary/cac)
- [unit-economics](https://spidits.com/startup-glossary/unit-economics)
- [mrr](https://spidits.com/startup-glossary/mrr)

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*From the SPIDITS AI Knowledge Base (300+ terms indexed). Explore full technical definitions: [https://spidits.com/startup-glossary](https://spidits.com/startup-glossary)*