Canonical URL: https://chargezen.com/glossary/ltv-lifetime-value

Revenue

# LTV

Lifetime Value

The total revenue expected from a customer over the entire duration of their relationship with your business. Higher LTV indicates stronger customer relationships and product-market fit.

## What is LTV?

Customer Lifetime Value (LTV or CLV) predicts the total revenue a customer will generate throughout their entire relationship with your business. It's one of the most important metrics for understanding the long-term value of your customer base. **Why LTV matters:** - Determines how much you can spend to acquire customers (CAC) - Identifies your most valuable customer segments - Guides product and service investment decisions - Helps optimize marketing spend **Factors that increase LTV:** - Reducing churn rate - Increasing average order value - Expanding share of wallet through upsells - Improving customer satisfaction

### Formula

LTV = ARPU × Gross Margin × Customer Lifespan (or ARPU ÷ Churn Rate)

### Example

If ARPU is $100/month and average customer lifespan is 24 months, LTV = $2,400.

### Why LTV Matters

LTV helps you understand the true value of acquiring and retaining customers, informing your acquisition budget and retention investments.

### Related Terms

[

ARPU

Revenue



](https://chargezen.com/glossary/arpu-average-revenue-per-user)[

Churn Rate

Retention



](https://chargezen.com/glossary/churn-rate)

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### More Revenue Terms

[View all Revenue definitions](https://chargezen.com/glossary?category=Revenue)

[

Previous

ARR



](https://chargezen.com/glossary/arr-annual-recurring-revenue)[

Next

ARPU



](https://chargezen.com/glossary/arpu-average-revenue-per-user)

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Browse our complete glossary of e-commerce and subscription terms.

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