Lifetime value (LTV)

A simple SaaS version: average MRR per customer divided by your monthly churn rate. $50 a month with 5% monthly churn gives an LTV of $1,000. For a store, it is the average order value times how many orders a customer places.

With a handful of customers, LTV is a guess, so use it as a range. Its main use is to set a limit on customer acquisition cost: you cannot spend more to win a customer than they bring in. The payback period matters too. Grow LTV by increasing repeat purchasessoon or cutting churn.