GLOSSARY
LTV (Lifetime Value)
What is LTV?
DefinitionLTV is the total gross profit a customer is expected to generate across their entire relationship with your brand, driven by order value, purchase frequency, retention, and margin.
Formula
LTV = Avg order value × Purchase frequency × Customer lifespan × Gross marginFor subscription health brands, LTV is dominated by retention. A GLP-1 patient at $299/month who stays 18 months is worth ~$5,400 in membership revenue, and at a 60% gross margin about $3,240 in gross profit, comfortably supporting a $250–350 CAC under the standard 3:1 LTV:CAC convention. The same patient cancelling after three months is worth under $900 in revenue and roughly $540 in gross profit, breaking 3:1 at any CAC above ~$180, which is why retention, not first-order CAC, decides the model.
Related terms
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