LTV

LTV (Lifetime Value), also written as CLV (Customer Lifetime Value), is the total net revenue expected from a customer over the entire duration of their relationship with the company. For subscription businesses: LTV = Average Revenue Per User (ARPU) × Gross Margin % ÷ Monthly Churn Rate.

LTV is a prediction, not a fact — it depends on assumptions about how long customers stay and whether they expand. Investors will challenge your LTV calculation because optimistic churn assumptions dramatically inflate the number. A customer assumed to stay 5 years on a 1.5% monthly churn assumption is very different from one assumed to stay 2 years on 4% monthly churn.

LTV is only meaningful alongside CAC. "Our LTV is ₹5 lakh" is meaningless without "and our CAC is ₹1 lakh." The ratio is the story.

Indian SaaS LTV calculations face a structural challenge: Indian SMB customers churn higher than enterprise customers globally. Monthly churn rates of 3–5% are common for SMB-focused Indian SaaS (implying average customer lifetime of 20–33 months), vs. <1% for Indian enterprise SaaS.

D2C brands in India have seen LTV compress significantly as category competition increases and brand loyalty weakens. Repeat purchase rates on Meesho-acquired customers vs. direct website customers can differ by 50–70%, making blended LTV calculations misleading without channel segmentation.