What Is LTV in SaaS?
LTV (Lifetime Value) is the total revenue one customer generates over their entire relationship with a product. For recurring revenue the basic formula is average revenue per customer per period multiplied by the average number of periods a customer stays. A $10/month product with 14-month average retention, LTV = $140.
The maths rests on repeat revenue, so LTV applies to anything a customer buys more than once, not only software. A subscription box or a membership site uses the same recurring formula as a SaaS account: revenue per period times average lifespan. A store with repeat buyers estimates it differently, as average order value times purchase frequency times how long a buyer keeps coming back. A course creator who sells a second and third course to the same student is raising LTV without a single new customer, and an app with in-app subscriptions counts each renewal the same way a subscription product does. Whatever the model, the same levers move the number: charging more per period, losing fewer customers to churn, and earning expansion revenue when people upgrade or buy add-ons. For most early products the biggest lever is retention. Moving average lifespan from 6 months to 12 doubles LTV without changing price or acquiring anyone new. Treat the figure as a projection, not a fact. A product launched a few months ago has no real history of how long customers stay, so its lifespan is a guess. Build LTV on optimistic churn assumptions and the inflated number will justify overspending on acquisition that the actual revenue never covers.
Why it matters
LTV sets the ceiling on what you can afford to spend winning a customer. If a customer is worth $50 over their lifetime, a cost per acquisition of $100 loses money no matter how good the ads are. Knowing the number, and being honest about how uncertain it is, keeps acquisition budgets tied to real economics rather than hope. Infinall's Strategy Agent factors your pricing into how it splits budget across funnel stages, so the plan stays inside the maths before any money is spent.
Related terms
Frequently asked questions
How do I calculate LTV if I just launched?+
Estimate monthly churn and work back from it. If 10 percent of customers cancel each month, average lifespan is roughly 10 months, so multiply that by revenue per customer per month. A store with no subscription can use average order value times how often a buyer returns. Treat the result as provisional and update it once you have three to six months of real data.
Does LTV only apply to subscriptions?+
No. The recurring formula fits a membership, a subscription box, or an app with in-app plans, but any business with repeat purchases has an LTV. A store, a course creator selling follow-up courses, or a shop with loyal buyers all generate revenue from the same customer over time, which is exactly what LTV measures.