Muze AI
Talk to SalesStart free trial
PlatformMuze MCPLiteResultsPricingTalk to SalesStart free trial

Glossary · Metrics

What is LTV?

Also known as Customer lifetime value.

Definition

LTV (customer lifetime value) is the total gross profit a customer generates across their whole relationship with your business, not just on the first order. It is the number that decides whether you can afford to acquire a customer at a loss on order one. A business with strong repeat purchase can pay more for a customer than its first-order maths allows. A business without repeat purchase cannot.

How it is calculated

LTV = Average order value × Orders per customer × Gross margin

What to know

Two versions of this number circulate and they are not interchangeable. Revenue LTV drops the margin term, so at a 50% margin it is double the figure you can actually spend against. Compare gross-profit LTV with CAC, never revenue LTV.

LTV is a forecast until the cohort has aged. A figure modelled from 60 days of purchase history assumes repeat behaviour you have not observed yet, so treat early LTV as a hypothesis and re-check it as the cohort matures.

Related terms

CACCAC (customer acquisition cost) is the full cost of winning a new customer, including ad spend, agency or staf...AOVAOV (average order value) is total revenue divided by number of orders. $48,000 across 600 orders is an AOV of...Payback periodPayback period is how long the gross profit from a customer takes to repay what you spent acquiring them. Spen...Contribution marginContribution margin is what is left from revenue after every cost that varies with the sale: product cost, shi...

Track this across every platform at once

Muze reads LTV and everything around it straight from your Meta, Google, Amazon and Shopify accounts, inside ChatGPT or Claude. Free to start.

See how Muze works