Lifetime Value and Customer Lifetime Value explained side by side. Learn when each term applies and how to calculate the metric correctly.
LTV estimates the revenue or profit a customer generates over the relationship. The abbreviation is common in SaaS, tech, and venture-backed startups.
Often used in forward-looking, predictive models and paired with CAC for unit economics analysis.
CLV is the same metric under a different name. The full form "Customer Lifetime Value" is preferred in marketing, CRM, academic, and enterprise contexts.
The label does not determine whether the calculation uses observed or predicted value.
LTV and CLV name the same general concept, but calculations can differ. Define whether you mean revenue or gross profit, observed value or a forecast, and the time horizon.
Before comparing an LTV:CAC benchmark with a CLV analysis, check that both use matching definitions and assumptions.
Revenue LTV = Monthly ARPA / Monthly Customer Churn (decimal)Example: ARPA = $200/month, Churn = 2% monthly. LTV = $200 / 0.02 = $10,000
Gross-Profit LTV = (Monthly ARPA x Gross Margin) / Monthly Customer Churn; use decimalsExample: ARPA = $200, Gross Margin = 75%, Churn = 2%. LTV = ($200 x 0.75) / 0.02 = $7,500
CLV = Average Purchase Value x Purchase Frequency x Average Customer LifespanUseful for transactional businesses. Keep purchase frequency and lifespan in matching time units; apply margin if you need gross-profit value.
| Criteria | LTV | CLV |
|---|---|---|
| Full Name | Lifetime Value | Customer Lifetime Value |
| Underlying Metric | Customer lifetime value; check the definition | Customer lifetime value; check the definition |
| Primary Context | SaaS, tech, venture capital | Marketing, CRM, academia, enterprise |
| Common Pairing | LTV:CAC ratio | CLV segmentation by cohort or persona |
| Temporal Focus | Can be historical or predictive | Can be historical or predictive |
| Formula Variations | Can use subscription or purchase-frequency models | Can use subscription or purchase-frequency models |
| Used In | Investor decks, SaaS benchmarks, unit economics | Marketing attribution, CRM analytics, academic research |
| Industry Benchmark | Bessemer guideline: gross-profit LTV:CAC of 3x or more | Varies widely by industry vertical |
Predictive models estimate future revenue or profit. They may model expansion, repeat purchases, and retention changes rather than assume constant churn. Either LTV or CLV can name the result.
Historical CLV sums all past revenue from a customer who has already churned or is still active up to the present day. It is a lagging indicator used to evaluate past performance rather than project future value.
Using gross revenue instead of gross margin
Label revenue and gross-profit LTV separately. For gross-profit LTV, subtract costs of delivering the product using a consistent margin definition.
Using annual churn instead of monthly churn in the simple formula
The formula LTV = ARPA / Churn requires that ARPA and churn use the same time unit. Mixing monthly and annual figures produces an incorrect estimate.
Ignoring expansion revenue
For SaaS with upsell and cross-sell, LTV should account for revenue expansion over time, not just the initial contract value.
Applying one LTV number to all customer segments
Customer groups can differ in pricing and retention. Compare LTV by plan, industry, or acquisition channel when the data supports it.
Use the free LTV calculator for a margin-adjusted, constant-churn estimate. Compare LTV:CAC, payback, and alternative churn assumptions.
LTV and CLV usually refer to customer lifetime value. Either can describe expected revenue or profit over the relationship, depending on the definition. The abbreviation alone does not tell you which formula, margin treatment, or forecast horizon was used.
Use the term your audience already uses, and define the calculation. Both LTV and CLV can be historical or predictive; neither abbreviation guarantees a particular method.
For a constant-churn subscription model, revenue LTV = monthly ARPA / monthly customer churn as a decimal. At $100 ARPA and 2% churn, revenue LTV is $5,000. Gross-profit LTV multiplies ARPA by gross margin first. Both assume stable revenue, margin, and churn.
Bessemer’s cloud-company guidance uses LTV:CAC of 3x or more as a reason to consider acquisition investment. Its payback targets are under 12 months for SMB, 18 for mid-market, and 24 for enterprise. These are guidelines, not guarantees; compare gross-profit LTV with CAC and assess cash needs and retention.