LTV (Lifetime Value)

Lifetime value indicates the contribution margin expected from a customer over the entire customer relationship. Methodologically, it is typically derived from average revenue, gross margin and customer retention or repeat-purchase rate (often as a function of the churn rate).

In combination with CAC, LTV shows whether customer acquisition is profitable and scalable; in SaaS, LTV/CAC ≥ 3:1 and a CAC payback of < 12–18 months are common benchmarks. The underlying assumptions are regularly a focus of due diligence.