# LTV

### How we get these data

LTV data is gathered from Shopify API App Events to support decision-making and marketing budget optimization.

### Understand the dashboard

LTV (Lifetime Value) is the total projected revenue a paying customer will bring to the application throughout their usage period.

**Calculation Logic**

Basic formula for SaaS Subscription model: 

<p align="center"><mark style="color:$info;">LTV = ARPU / Churn Rate</mark></p>

**Note:** Churn Rate here should be the % of users cancelling paid plans monthly (User Churn Rate).

This line chart visualizes the trend of your projected LTV over your selected time period (Day, Week, Month), with a percentage comparison against the previous 31-day period, allowing you to monitor how customer value changes in response to pricing or retention shifts.

<figure><img src="/files/ghfQRJ2CpUxSLpcTNcoH" alt="" width="563"><figcaption></figcaption></figure>

The breakout table provides a detailed daily view of the LTV values that contribute to this trend, helping you pinpoint specific days of fluctuation.

The panels below offer a quick historical comparison of your current LTV against previous months and years to identify if your long-term customer value is growing or declining.

<figure><img src="/files/vPlJuqcGORcvpwOHodLm" alt="" width="563"><figcaption></figcaption></figure>

### How LTV data can benefit you

* **Marketing Compass:** LTV serves as a critical guide to determine your Customer Acquisition Cost (CAC) limit. By knowing a customer's total value, you can decide exactly how much you can afford to spend to acquire a new user.
* **Golden Rule:** It allows you to monitor your LTV:CAC ratio. A healthy and sustainable SaaS business typically maintains a ratio where LTV is greater than CAC (ideally an LTV:CAC ratio > 3:1).


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