What is LTV?

LTV — customer lifetime value — is what a customer has been worth in money you keep: the contribution margin of all their net-sale orders to date. Most tools report lifetime revenue and call it LTV; here the figure is margin — revenue minus cost of goods, shipping and payment fees — because that is the number acquisition cost actually has to beat.

Formula

LTV (customer)  = Σ contribution margin over the customer's net-sale orders
average LTV     = mean of lifetime margin across all customers

Worked example

A customer has placed four orders totalling €640 of revenue, carrying €205 of contribution margin: their LTV is €205, not €640. If acquiring a customer like them costs €80, the revenue basis says 8× return; the margin basis says 2.6× — still good, but a different budget conversation. At store level, an average LTV of €120 against a blended CAC of €95 leaves €25 of lifetime headroom per customer, which is thinner than most revenue-basis dashboards would suggest.

How Saldo Metrics computes it

v_customer_lifetime_value collapses each customer's orders to order grain first, applying the order-grain cost rule: an order with any uncosted line has unknown margin (NULL), never zero, so a customer's lifetime margin sums only their costed orders and the row reports the uncosted order count and revenue beside it. The per-order average divides by costed orders only — dividing costed margin by all orders would understate it in proportion to the coverage gap. Cancelled and refunded orders never enter. The KPI averages lifetime_margin_base across all customers; the same view feeds days-since-last-order, discount received and margin percent per customer.

Why it matters

LTV against CAC is the solvency equation of paid acquisition: a store can grow at positive ROAS on first orders and still lose money if lifetime margin never covers acquisition. On the margin basis, LTV:CAC and CAC payback become real financial statements rather than optimistic revenue multiples.

Common mistakes

• Comparing this LTV with revenue-basis figures from other tools. They differ by roughly your margin rate; neither is wrong, but only one pays for ads.
• Reading average LTV as a forecast. It is realized history — young customer bases understate eventual lifetime value simply because lifetimes are still running. Cohort economics shows LTV maturing by cohort age.
• Ignoring cost coverage. Customers who bought uncosted SKUs carry incomplete LTV; the uncosted columns in the view say how much is missing.

Where you see this in the app

The Average LTV KPI on the dashboard, the per-customer figures behind the customers page, and the LTV side of the CAC payback widget.