LTV
Also known as: Lifetime Value, Customer Lifetime Value, CLV
Lifetime Value — the total revenue a company expects to generate from a single customer over the duration of the relationship.
Full Definition
LTV is a key metric in the H-BMC Investor Economics block. It is calculated as the average contract value multiplied by the average customer lifetime (or retention rate). For SaaS and subscription healthcare companies, LTV is typically expressed as annual contract value divided by churn rate. LTV must be significantly higher than CAC (Customer Acquisition Cost) to produce a viable business model — a LTV:CAC ratio of 3:1 or higher is generally considered healthy.
Example
A remote monitoring platform charges $120K annually per health system. Average customer lifetime is 5 years. LTV = $600K. If CAC is $80K, the LTV:CAC ratio is 7.5x — a strong unit economic model.