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Section 12 · Lifetime Value
The Number That Lets You Outspend Competitors
Whoever can pay the most for a customer wins.
Revenue
Customers
Why it works
If your customer is worth $300 over 2 years and your competitor only knows their first-purchase value of $50, you can outbid them on every ad — profitably.
Connects to
Revenue
Customers
When to use it
Always — LTV defines how much you can afford to spend on acquisition.
When NOT to use it
Don't fake LTV with assumptions. Use real cohort data after 90+ days.
How to use it
- Calculate LTV = avg order value × purchase frequency × customer lifespan.
- Increase LTV with upsells, cross-sells, and subscriptions.
- Increase LTV with retention — emails, onboarding, customer success.
- Re-run LTV quarterly — it moves as your business changes.
Examples
Course
$497 course → 30% buy $997 upsell → LTV $796.
SaaS
$49/mo × 14 months avg = $686 LTV.