LTV: customer value over a defined horizon
In MARKMA, LTV (Lifetime Value) is contribution profit from all of a customer’s purchases over an explicitly stated horizon, not revenue or an undefined “lifetime” amount.
Formula
LTV = contribution per purchase × customer purchases over the horizon
Contribution per purchase = average order value − variable costs − taxes or fees attributable to the sale. Always state the horizon.
- Contribution — contribution profit from one purchase (₽)
- N — customer purchases over the horizon (items)
Worked example
- Contribution per purchase: 3 000 ₽
- Purchases over the horizon: 4
- LTV = 3,000 ₽ × 4 purchases
Result: 12,000 ₽ contribution over the horizon.
How to interpret it
- Compare LTV with CAC over the same horizon. If LTV is below CAC, the customer is unprofitable even before fixed costs.
- Revenue-based LTV is higher than contribution LTV because variable costs are deducted from contribution.
Common mistakes
- Calling revenue LTV and comparing it with CAC.
- Leaving out the horizon and mixing first purchase with repeat purchases.
- Reporting retention as a percentage without stating its period.
Calculate with your own data
Open “Unit economics” with an example
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Related metrics
Editorial team: MARKMA Editorial Team. Reviewed: .