LTV

What is blended LTV? Copied

Blended LTV (Lifetime Value) estimates the average monthly recurring revenue (MRR) per customer across both churned and active customers.

• Blended LTV is MRR-based, prorated by time and calculated with a blend of actual and predicted future value.

• The formula accounts for both churned and active customers.

• The chart granularity (monthly, weekly, etc.) affects how much MRR is recognized to date, but not the final lifetime value.

• Predictions are based on current MRR and historical churn behavior.

The formula Copied

We calculate Blended LTV using MRR:

Blended LTV =
(MRR from churned customers / # churned) × % churned
+
(Expected MRR from active customers / # active) × % active

Or more simply:

Example calculation Copied

Let’s say you have:

• Total customers: 1,000

• Churned: 400

• Active: 600

MRR Data:

• Churned customers generated $120,000 in prorated MRR while subscribed
  → $120,000 / 400 = $300 MRR-based LTV from churned

• Active customers have contributed $90,000 MRR so far, and you expect $60,000 more based on their current MRR and average lifetime
  → $150,000 total / 600 = $250 MRR-based LTV from active

Final calculation:

Blended LTV = (300 × 0.4) + (250 × 0.6)
             = 120 + 150
             = $270

How does reporting view affect LTV? Copied

LTV uses MRR-based, prorated recognition, so it aligns with your reporting granularity. Let’s say you have a customer that pays $120 for an annual subscription in January:

The in-progress LTV will appear lower in shorter-term views (e.g., monthly) — but the final LTV is consistent across all views once the full MRR is earned.

How is expected MRR from active customers estimated? Copied

We combine actual earned MRR so far with predicted future MRR:

1. Actual = Cumulative, prorated MRR recognized to date

2. Predicted = Current MRR × fractional months remaining

   1. Based on a predicted cancellation date, calculated as:

      Predicted cancellation date = First subscription start +
                                    avg. lifetime of all churned
                                    customers up to that point

      plaintext

   2. If the predicted cancellation date is before the end of the reporting period (i.e., the customer has already "outlived" the average), we only count expected MRR up to the end of the period being displayed, not the customer's invoice cycle.
      In this case:

      Predicted MRR = Current MRR ×
                      fractional months between today and
                      the end of the reporting period

      plaintext

Example:

• A customer starts a $10/month subscription on Jan 15 and is still active on July 21.

• The average lifetime of churned customers is 1 month, so the predicted churn date would have been Feb 15.

• But since they’ve remained active well past that, we assume they'll remain active at least until the end of the current reporting period.

If viewing LTV in June:

• Revenue from Jan 15–Jun 15: $10 × 5 = $50

• Revenue from Jun 15–Jun 30: $10 × 0.5 = $5

• Expected LTV = $55

If viewing LTV in July (as of July 21):

• Revenue from Jan 15–Jul 15: $10 × 6 = $60

• Revenue from Jul 15–Jul 21: $10 × (6 ÷ 30) = ~$2

• Expected LTV = $62

Note: This assumes current MRR holds steady — meaning no contraction, reactivation, or unexpected churn. This can slightly overstate LTV for volatile customers.

Key things to note Copied

• LTV will only be calculated if your account has at least 10 churned customers.

• LTV will not appear at all if fewer than 10 customers have churned.

• Once the threshold is reached, LTV is only calculated from the first period where churned count ≥ 10.

  • Example: If your 10th churned customer cancels in April, LTV data starts from April onward.

• Learn more about how our approach differs from another popular LTV formula here: