--- title: "What Is LTV? Customer Lifetime Value Explained | RentAnOTT" description: "LTV is the total revenue a subscriber brings before they cancel. See the formula for streaming, how churn drives it and how it compares with CAC." url: "https://www.rentanott.com/glossary/ltv" markdown_url: "https://www.rentanott.com/glossary/ltv.md" category: "Metrics" updated: "2026-10-05" --- # What is LTV? LTV (customer lifetime value) is the total revenue, or margin, a service expects to earn from one subscriber over the whole time they stay. It tells you how much you can afford to spend to acquire a customer. ## How to calculate LTV The simple formula is average monthly revenue per subscriber divided by monthly churn rate. A subscriber paying $6 a month on a service with 5% monthly churn has an LTV of about $120, because the average subscriber stays around 20 months. For a truer figure, multiply by gross margin. If delivery, payment fees and store commission take 30% of revenue, the same subscriber is worth about $84 in margin. ## What drives LTV - Churn: the strongest lever. Cutting churn from 5% to 4% raises LTV by a quarter - Price and tier mix: revenue per subscriber each month - Extra revenue: rentals, tickets and advertising on top of the plan - Costs per subscriber: delivery, commission and any per-subscriber platform fee ## LTV and CAC LTV matters most set against customer acquisition cost. If a subscriber is worth $120 and costs $40 to acquire, the ratio is 3 to 1, a commonly cited healthy level. Below 1 to 1, every new subscriber loses money. The simple formula assumes churn is constant. In practice new subscribers leave faster than long-standing ones, so check the estimate against how real cohorts have behaved. ## LTV on RentAnOTT The revenue calculator works out SVOD lifetime value from your price, churn and fees. RentAnOTT analytics report retention, cohorts and churn on every plan. [Try the revenue calculator](https://www.rentanott.com/tools/ott-revenue-calculator). ## Related terms - [CAC](https://www.rentanott.com/glossary/cac) — CAC (customer acquisition cost) is the average amount a service spends on marketing and sales to gain one new paying customer. It is total acquisition spending in a period divided by the number of new customers won in that period. - [LTV:CAC ratio](https://www.rentanott.com/glossary/ltv-cac-ratio) — The LTV:CAC ratio is customer lifetime value divided by customer acquisition cost. It shows how many dollars a subscriber returns over their lifetime for each dollar spent winning them. - [Churn rate](https://www.rentanott.com/glossary/churn-rate) — Churn rate is the percentage of a streaming service's subscribers who cancel or fail to renew during a period, usually a month. It is the main measure of how well a subscription service keeps its customers. - [ARPU](https://www.rentanott.com/glossary/arpu) — ARPU (average revenue per user) is a service's total revenue in a period divided by the number of users in that period. It shows how much each user is worth on average, across subscriptions, advertising and one-time sales. - [MRR](https://www.rentanott.com/glossary/mrr) — MRR (monthly recurring revenue) is the subscription income a service can expect every month from its active subscribers, with all plans normalized to a monthly amount. It excludes one-time sales and other irregular income. - [Retention rate](https://www.rentanott.com/glossary/retention-rate) — Retention rate is the percentage of subscribers, or users, who are still with a service at the end of a period out of those who were there at the start. It is the mirror image of churn rate. ## Further reading - [OTT subscription plans and tiers](https://www.rentanott.com/blogs/ott-subscription-plans) - [How to start a streaming service](https://www.rentanott.com/blogs/how-to-start-a-streaming-service) - [Features](https://www.rentanott.com/features) ## Frequently asked questions ### What does LTV stand for? LTV stands for lifetime value. It is also written CLV or CLTV, for customer lifetime value. ### Can LTV be calculated for a free, ad-supported service? Yes. Use average ad revenue per viewer per month in place of the subscription price, and the rate at which viewers stop returning in place of churn. ### How often should LTV be recalculated? Whenever price, churn or costs change materially, and at least quarterly. A figure based on last year's churn can be badly wrong after a price change. All 163 terms: [Streaming and OTT glossary](https://www.rentanott.com/glossary). ## Book a demo Tell RentAnOTT what you are launching. The team walks through the platform and maps the path to go-live around your catalog, markets and revenue model. Book a demo: https://www.rentanott.com/contact ## More from RentAnOTT - [Home](https://www.rentanott.com/index.md) — What RentAnOTT is, what every plan includes, and how launch works - [Features](https://www.rentanott.com/features.md) — Every core feature and optional add-on - [Pricing](https://www.rentanott.com/pricing.md) — Platform tiers, apps, add-ons, usage rates and example bills in INR and USD - [Free tools](https://www.rentanott.com/tools.md) — OTT app builder and calculators for streaming revenue, bandwidth, bitrate and pricing - [Insights](https://www.rentanott.com/blogs.md) — All streaming business articles - [Glossary](https://www.rentanott.com/glossary.md) — Definitions of streaming and OTT terms - [Book a demo](https://www.rentanott.com/contact.md) — Talk to RentAnOTT about your launch Full site in one file: https://www.rentanott.com/llms-full.txt