LTV (Lifetime Value)
The total revenue a customer generates before they churn. What you can spend to acquire them.
LTV is calculated as (Average Revenue Per Account / Churn Rate). If your monthly ARPU is $30 and monthly churn is 5%, LTV is $30 / 0.05 = $600. That number tells you how much you can spend acquiring a customer while still being profitable. The classic benchmark: LTV:CAC ratio should be at least 3:1. Indie founders often overestimate LTV in year one because they don't have enough data to know real churn — always sanity-check LTV against cohort retention curves, not averages.
Related terms
CAC (Customer Acquisition Cost)
The total cost of acquiring one paying customer. Marketing spend + sales cost, divided by new customers.
Churn
The rate at which paying customers stop paying you. The silent killer of SaaS.
MRR (Monthly Recurring Revenue)
The predictable monthly revenue from active subscriptions. The indie-founder scoreboard metric.