CLTV / LTV / CLV — Customer Lifetime Value

Definition

The total CONTRIBUTION (gross-margin) profit a customer generates before churning. All three abbreviations mean the same thing.

Formula

CLTV = ARPU x Gross margin % x Lifetime (months)
     = (ARPU x GM%) / Monthly churn      (equivalent)
Discounted: CLTV = (ARPU x GM%) / (churn + discount rate)

Worked Example

ARPU $42.00, gross margin 75%, churn 2.5%/month:

Margin contribution = $42.00 x 0.75 = $31.50/month
Lifetime = 1 / 0.025 = 40 months

CLTV = $31.50 x 40 = $1,260

Discounted at 1%/month:
CLTV = $31.50 / (0.025 + 0.01) = $900

Interpretation & Pitfalls

Pitfall #1: computing LTV on revenue instead of margin overstates it ($1,680 vs $1,260 here). Pitfall #2: assuming flat churn; use cohort curves for material decisions.

In TupicFinance

CLTV per service is derived from live ARPU, per-service gross margin, and observed churn.