Lifetime value

The gross profit a customer generates over the whole relationship, discounted where the horizon is long.

A customer spending ₹600 a year at a 35% contribution margin, with 28% annual churn, is worth about ₹750.

The arithmetic is contribution per period divided by the churn rate, which assumes churn is constant. It rarely is: customers who survive the first year churn far less than new ones, so a single blended rate understates the value of a mature base and overstates the value of a young one.

Cohort data fixes this and most companies do not publish it.

Treat any lifetime value estimate as a hypothesis about retention.