Okuzeka
Entrepreneurship & Startups vocabulary · Unit Economics & Metrics

Lifetime value

Meaning in entrepreneurship & startups, with examples

nounCommon term

In entrepreneurship & startups, lifetime value means: The total revenue or profit a company expects to earn from one customer during the whole time that customer keeps buying, often shortened to LTV.

In Turkish: müşteri yaşam boyu değeri, yaşam boyu değer

How it is used

Also called customer lifetime value (CLV or CLTV). It is compared with customer acquisition cost as the LTV to CAC ratio; about three to one is a commonly quoted rule of thumb for subscription businesses. Methods differ: some use revenue, others gross margin.

Example sentences

  1. Our average lifetime value is 900 dollars, and it costs us 250 to acquire a customer.

  2. Lower churn would raise lifetime value more than any price increase.

Common collocations

  • customer lifetime value
  • LTV to CAC ratio
  • increase lifetime value
  • average lifetime value
  • customer acquisition costThe average amount a company spends on sales and marketing to win one new paying customer, usually shortened to CAC.
  • unit economicsThe revenue and costs connected to one unit of the business, such as one customer or one order, which show whether each sale makes or loses money.
  • churnThe loss of customers or subscribers who stop using or paying for a product in a given period, usually measured as a monthly or yearly percentage.
  • retentionA company's ability to keep its customers or users over time, usually measured as the percentage who are still active or paying after a certain period.
  • MRRMonthly recurring revenue: the predictable income a subscription business earns every month from active customers, not counting one-off fees.

More terms: Unit Economics & Metrics

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