Lifetime Value (LTV)
How much revenue the average customer brings before they leave.
LTV = monthly revenue per customer ÷ monthly churn
Worked example: ₹199 ÷ 0.2 = ₹995.
Why it matters
It tells you how much you can afford to spend to win a customer, and it shows why churn matters so much.
How to use it
- Work out monthly revenue per customer.
- Divide it by monthly churn.
- Spend less than this to win a customer.
Example
At ₹199 a month and 20% monthly churn, the average customer stays 5 months and is worth ₹995.
Watch out
This simple version ignores your costs, and it assumes churn stays steady. Use it as a first estimate.