There are several methods to calculate LTV, with differing advantages and disadvantages. This post discuss some of the more popular methods, and the fundamental assumptions that underlie them.
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The LTV Equation (or LTV Formula) is one of the most widely used methods of calculating LTV - it's relatively simple and illustrates the main drivers of LTV - but also makes a number of implicit assumptions and so may be unsuitable for modern startups. This post addresses the assumptions behind this method, and discusses when it should be applied or avoided.
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CAC and LTV are invaluable metrics to understand the Operations of a Startup; but they are both frequently misunderstood. We use the analogy of Jack and the Beanstalk to outline what matters in these metrics, and why they're critical to your Startup's success
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