Customer Lifetime Value (LTV or CLV) is the total revenue or profit a customer generates over their entire relationship with the business. Calculated for subscriptions as: ARPU × Gross Margin / Churn Rate. A SaaS company with $200/month ARPU, 80% gross margin, and 2% monthly churn has LTV of $8,000. LTV is the ceiling for what you can spend on customer acquisition — LTV/CAC ratios above 3:1 indicate healthy unit economics. Higher LTV businesses can afford more aggressive sales/marketing investment. Improving LTV: reduce churn (best lever), increase pricing, upsell/cross-sell existing customers.
Article
ARR
Annual Recurring Revenue (ARR) is the annualized value of subscription contracts — the standard metric for SaaS businesses.…
Break-Even Point
Break-even point is the level of sales where total revenue equals total costs — zero profit, zero loss.…
Budget vs Actual
Budget vs Actual (BvA) variance analysis compares budgeted financial performance to actual results, identifying gaps and their drivers.…
Burn Multiple
Burn Multiple is a venture capital metric: Net Cash Burn / Net New ARR — measuring how efficiently…
Burn Rate
Burn rate is the rate at which a startup spends cash beyond what it generates from operations, expressed…
CAC
Customer Acquisition Cost (CAC) is total sales and marketing spend divided by new customers acquired in a period.…
LTV
August 22, 2026 · Aditya Gupta
Corporate Finance
Related terms
ARR
Annual Recurring Revenue (ARR) is the annualized value of subscription contracts — the standard metric for SaaS businesses.…
Break-Even Point
Break-even point is the level of sales where total revenue equals total costs — zero profit, zero loss.…
Budget vs Actual
Budget vs Actual (BvA) variance analysis compares budgeted financial performance to actual results, identifying gaps and their drivers.…
Burn Multiple
Burn Multiple is a venture capital metric: Net Cash Burn / Net New ARR — measuring how efficiently…
Burn Rate
Burn rate is the rate at which a startup spends cash beyond what it generates from operations, expressed…
CAC
Customer Acquisition Cost (CAC) is total sales and marketing spend divided by new customers acquired in a period.…
