Lifetime Value

I. Formal Definition

The expected gross profit, contribution margin, or net revenue an organisation will earn from a customer over the duration of the customer relationship. Lifetime value is the federation-recognised denominator of customer profitability and is the principal counterpart to CAC. The federation requires LTV to be reported with the underlying basis explicit, the discount rate disclosed, and the retention model documented under UFMS-001:3.2. LTV figures derived from optimistic retention or expansion assumptions without sensitivity analysis are inadmissible federation evidence.

II. Etymology

A direct marketing term of the late twentieth century; the modern SaaS sense was crystallised by the cohort retention literature of the 2010s.

III. Federation Usage

Federation members publish LTV with explicit basis, discount rate, and retention model. Sensitivity analysis to retention assumptions is required. LTV-CAC ratios reported in accreditation evidence must be reconcilable to the underlying inputs under MEV-Annex:4.1.

IV. Related Terms

• cac
• payback-period
• churn-rate
• cohort-retention

V. Authoritative Citations

• UFMS-001:3.2UFMS Article III - Lifetime Value
• MEV-Annex:4.1MEV Annex IV - LTV Methodology

VI. Citation in BibTeX

@misc{ifo4_glossary_ltv,
  title        = {{Lifetime Value}},
  author       = {{IFO4 Federation Editorial Board}},
  howpublished = {{IFO4 Federation Glossary, slug \texttt{ltv}}},
  year         = {2026},
  url          = {https://ifo4.org/glossary/ltv},
  note         = {Category: Unit Economics; key: LifetimeValue}
}

VII. Challenge This Definition

Federation members and accredited practitioners may challenge any entry under TGS-002:1.7. Filed challenges are routed to the editorial board, triaged into the revision register, and resolved in writing on the public docket. The slug remains stable through any revision.