Glossary
What is customer lifetime value (LTV)?
Customer lifetime value, LTV or CLV, is the total gross margin a customer brings over the whole time they stay with you. A simple version multiplies the average monthly margin per customer by the average number of months customers stay. Compared with customer acquisition cost, it shows whether winning customers pays.
Published by Sellinger AI. Numbers and settings checked on 24 October 2026 against the fact register. Report an error.
How do you calculate it?
A simple formula: LTV = average monthly revenue per customer x gross margin x average customer lifetime in months. Average lifetime is often estimated as 1 divided by the monthly churn rate.
| Input | Value |
|---|---|
| Monthly revenue per customer | 500 |
| Gross margin | 80% |
| Monthly churn | 2.5%, so an average lifetime of about 40 months |
| LTV | 500 x 0.8 x 40 = 16,000 |
How does LTV pair with CAC?
The ratio of LTV to customer acquisition cost shows how much margin each unit of acquisition spend returns. A common rule of thumb in software is that LTV should be several times CAC, but the right level depends on how fast you need the money back. Payback time, the months of margin it takes to repay CAC, is often the more practical number.
What makes LTV unreliable?
- Young companies have too little history to know real lifetimes.
- Averages hide segments: small customers may churn fast while large ones stay.
- Using revenue instead of margin overstates it.
How Sellinger handles it
Sellinger does not calculate LTV. It helps with the part of LTV that comes from keeping customers: the customer renewal and churn outreach use case shows how agents follow up with existing customers. Cancel, upgrade or change modules at any time. There are no lock in contracts and no setup fees on self serve plans.
Common questions
Should LTV use revenue or margin?
How do I estimate lifetime with little data?
Does LTV include upsells?
Sources and method
Formula and example are illustrative. Sellinger contract terms from the fact register, checked 24 October 2026.
Related: Customer acquisition cost, Churn rate, Customer success teams, Renewal and churn outreach.
