What is LTV (Customer Lifetime Value)?
Turkish: LTV
LTV estimates the total gross revenue a customer is expected to generate across their relationship with a product or business.
What is LTV?
LTV (Customer Lifetime Value) estimates the economic value a customer will create over the full relationship with a business. It is especially useful in subscriptions, e-commerce, and products with repeat purchases because it puts customer acquisition cost into context.
How Is It Calculated?
In a simple SaaS model, LTV is based on average revenue per account, gross margin, and expected customer lifespan. One common formula is LTV = ARPA x gross margin / churn rate. More mature models also account for discounts, refunds, plan upgrades and downgrades, cohort behavior, and support costs.
Business Use
LTV helps teams decide how much to spend on marketing, sales commissions, free trials, and pricing experiments. For example, if a customer has an expected 12-month LTV of $1,000, a $900 acquisition cost may be too risky. If the same segment stays for 24 months with low support cost, the decision changes.
Churn is one of the most sensitive inputs in LTV. MRR provides the monthly subscription revenue base commonly used in LTV analysis.
Related Terms
Churn rate measures the share of customers or revenue lost in a period, showing retention health in subscription businesses.
MRR (Monthly Recurring Revenue)MRR measures the recurring monthly portion of subscription revenue, showing how new sales, expansion, contraction, and churn affect SaaS growth.
Product-Market FitProduct-market fit is the stage where demand, usage, and retention signals show that a product solves a real customer problem well enough to scale.