CUROBI
Install free
Glossary

Customer Lifetime Value

Also known as: LTV, CLV, Lifetime value

Customer lifetime value (LTV) is the total revenue — or, more usefully, gross profit — a business expects from a single customer across the whole of their relationship, which for a subscription is driven by order value, order frequency, and how long the subscriber stays.

LTV is what makes subscription economics different from one-off retail: a store can afford to acquire a subscriber at a cost that would be ruinous on a single order, because the return repeats. The number only means something when it is compared against acquisition cost, and it is worth calculating on gross profit rather than revenue — an LTV built from revenue flatters every business with thin margins, which includes most physical-product subscriptions.

In a subscription, LTV moves on three levers: average order value, cadence, and retention. Retention is usually the one with the most headroom, because extending the average subscriber life multiplies every future order, whereas raising price or frequency risks accelerating the cancellation it was meant to outrun.

This is why churn work pays for itself twice — it protects revenue that is already booked, and it raises the ceiling on what the business can afford to spend acquiring the next subscriber.

Related terms

  • Average Order Value — Average order value (AOV) is the mean value of a single order — total revenue divided by number of orders — and in a subscription business it is measured per recurring charge, which makes it one of the three inputs to lifetime value alongside frequency and retention.
  • Churn — Churn is the rate at which subscribers cancel or lapse over a given period — the share of recurring customers a business loses — and it is the single most important number in a subscription business because retained revenue compounds while churned revenue must be re-acquired.
  • Monthly Recurring Revenue — Monthly Recurring Revenue (MRR) is the predictable revenue a subscription business expects to collect each month from its active subscriptions, normalized to a monthly figure — the core measure of the size and growth of recurring revenue.
  • Voluntary Churn — Voluntary churn is subscription cancellation caused by a customer decision — they click cancel — as opposed to a failed payment, and it is usually a response to price, to product piling up between deliveries, or to the box becoming repetitive.

← All subscription commerce terms