📈 Metrics

Lifetime value (LTV)

The total profit a customer brings before they leave.

Formula

LTV ≈ (ARPU × Gross margin %) ÷ Monthly churn

LTV estimates how much a customer is worth over the whole relationship.

It grows when customers pay more, stay longer, or cost less to serve.

🧮 Example

A subscriber pays ₹500/month at 80% margin and churns 5% a month. LTV ≈ (500 × 0.8) ÷ 0.05 = ₹8,000.

🎯 Interview tip

Small changes in churn swing LTV massively — always ask how long customers stay.

Used in

Learn next

Customer acquisition cost (CAC)

How much you spend to win one new customer.

Churn

The share of customers who leave in a period.

ARPU

Average revenue per user.

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