Customer Lifetime Value (LTV)
The total profit you can expect from one customer across the whole time they stay with you.
Customer Lifetime Value estimates how much a single customer is worth over their entire relationship with you — not just their first purchase, but all the repeat orders, renewals, and upgrades, minus the cost of serving them. A coffee-shop regular who spends a little each week for years can be worth far more than a one-time big order. LTV turns "a customer" into a number you can plan around.
You can estimate it from a few inputs: average order or subscription value, how often people buy, and how long they typically stay before leaving (churn). It's an estimate, not a guarantee, and it gets more accurate as you build up history. Many owners look at LTV alongside what it costs to acquire a customer to judge whether their growth is healthy.
Why it matters
Knowing what a customer is worth over time tells you how much you can afford to spend to win one and how much keeping them is really worth.