LTV (Lifetime Value) is the total net revenue a startup expects to earn from a single customer over the entire duration of their relationship.
Serves as a vital financial metric for unit economics and investor reporting; tracking LTV helps founders manage cash runway and growth efficiency during customer value projections and saas financial audits.
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.
LTV = Average Revenue Per Account (ARPU) / Customer Churn Rate.
By lowering churn, increasing pricing, cross-selling additional products, and extending contract lengths.
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