Definition
Customer lifetime is the expected duration a customer stays subscribed. It's often approximated from churn rate (with consistent time units).
Formula
Customer lifetime ~ 1 / churn rate
Common mistakes
- Using monthly churn to compute annual lifetime (unit mismatch).
- Assuming churn is constant over time (it often changes by tenure).
Measured as
Customer lifetime ~ 1 / churn rate
Misused when
- Using monthly churn to compute annual lifetime (unit mismatch).
- Assuming churn is constant over time (it often changes by tenure).
Operator takeaway
- Keep Customer Lifetime consistent by cohort, segment, and period before you use it as a decision signal in planning or reporting.
- Interpret the metric alongside retention, margin, or payback so one ratio does not hide the real operating trade-off.
Next decision
- Quantify the impact with Unit Economics Calculator if you need to turn the definition into an operating assumption.
- Read Unit economics: CAC, payback, LTV, and LTV:CAC (how to model them) if the decision depends on interpretation, policy, or trade-offs beyond the raw formula.
Where to use this on MetricKit
Calculators
- Unit Economics Calculator: Model CAC, payback, LTV, and LTV:CAC together from ARPA, gross margin, and churn.
- 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.
Guides
- Unit economics: CAC, payback, LTV, and LTV:CAC (how to model them): A practical unit economics guide: consistent definitions for CAC and LTV, how to calculate CAC payback period, and how to interpret LTV:CAC.
- 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.
- 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.