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PerformanceTerm

LTV

Lifetime Value · customer lifetime value

LTV (Lifetime Value) is the total revenue from one client for the entire time. Main metric for subscriptions, e-com with repeat purchases, b2b.

LTV - Lifetime Value, customer lifetime value: total revenue from one customer for the entire duration of the relationship. It is calculated as (average bill × frequency of purchases × lifespan in the cohort).

LTV is the main metric for subscription models (SaaS, EdTech), e-com with repeat purchases (cosmetics, electronics), b2b with long contracts. Without LTV, it is impossible to correctly estimate how much you can pay to acquire a customer (CAC).

Healthy ratio: LTV / CAC ≥ 3. If it’s less than 3, the business model eats itself up in attraction. If it’s more than 5, you’re usually not investing enough in growth.

In my projects, I calculate LTV by cohorts (January, February, March...), and not by the average for the entire pool. This is because the quality of marketing changes over time - the January 2024 cohort may have an LTV of RUB 12,000, and the December 2024 cohort may have an LTV of RUB 18,000, because I improved targeting and cut out irrelevant audiences.

LTV/CAC and payback period calculator →

Frequently asked questions about LTV

What is LTV in simple words?+
LTV - Lifetime Value, how much money one client brings in during the entire relationship with the company. It is calculated: average order value × frequency of purchases × retention period (in months). Main metric for SaaS, subscriptions, e-com.
What LTV/CAC ratio is considered good?+
The 3:1 benchmark is a 2010s US myth for low-capital SaaS. In the Russian Federation 2026, the real median is 2-2.5:1 for most models. With a short runway, a short payback is more important than a high LTV/CAC.
How to grow LTV?+
Four levers according to the power of influence: retention (extending the life of the client is the main lever), frequency of purchases, average order value through cross-sell and upsell, return of those who left through win-back campaigns.
Should margin be included in LTV?+
Yes. Correct LTV is considered “by margin”: the contribution of each sale to cover fixed costs. Without margin, the figure is overestimated by 2-5 times and leads to incorrect decisions on CAC.

Related terms

CACROASChurnRetention

Where is it understood in practice?

Failure case: −20% for the quarter. What did I do wrong in the segmentation hypothesis?

7 min reading

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