Definition
Cohort-based LTV estimates lifetime value using observed retention and gross profit over time for a cohort, rather than a simple churn formula.
How to use it
- More accurate when churn changes over time or expansion is meaningful.
- Use cohorts by plan/channel to avoid mixing behaviors.
Why this matters
This term matters because small changes compound in SaaS metrics. Use consistent definitions by cohort and segment so you can diagnose retention, payback, and growth quality.
Practical checklist
- Write a 1-line definition for "Cohort-based LTV" that your team will use consistently.
- Keep the time window consistent (weekly/monthly/quarterly) when comparing trends.
- Segment results (channel/plan/cohort) before drawing big conclusions from blended averages.
- Use a calculator that references this term (e.g., Cohort LTV Forecast Calculator) to sanity-check assumptions.
- Read the related guide (e.g., Cohort LTV forecasting: churn, expansion, discounting (practical model)) for context and common pitfalls.
Where to use this on MetricKit
Calculators
- Cohort LTV Forecast Calculator: Estimate cohort-based LTV using churn, expansion, gross margin, and optional discounting.
- Retention Curve Calculator: Model a simple cohort retention curve (logo retention) and translate it into expected revenue and gross profit over time.
- Two-stage Retention Curve Calculator: Model a retention curve with different churn rates for early months vs steady-state, and estimate expected value over time.
- Unit Economics Dashboard Calculator: Compute a unit economics snapshot: gross profit LTV, CAC payback, LTV:CAC, and break-even targets from a few inputs.
- Cohort Payback Curve Calculator: Estimate when a cohort pays back CAC using a simple retention curve (two-stage churn) and optional expansion.
Guides
- Cohort LTV forecasting: churn, expansion, discounting (practical model): A practical guide to cohort-based LTV: why it beats simple churn formulas, how to choose assumptions, and how to interpret discounted LTV.
- Cohort vs aggregate metrics: why averages can mislead: Aggregate metrics hide churn and expansion dynamics. Learn when to use cohort analysis and how to interpret retention and LTV.
- Retention curves: how to read them and why they matter: A practical guide to retention curves: what they show, how to interpret churn vs retention, and how to connect retention to LTV and payback.
- Two-stage churn: modeling early drop-off vs steady-state retention: A practical guide to two-stage churn models: why early churn matters, how to model it, and how to connect retention improvements to LTV.
- Unit economics dashboard: LTV, CAC, payback, and what to improve: A practical guide to unit economics: how to compute gross profit LTV, CAC payback, and LTV:CAC (and what levers improve them).