Lifetime Value
Definition
The total gross profit contribution expected from a single customer over the duration of the customer relationship. Lifetime value must be calculated using gross profit, not revenue, as the numerator. It must be derived from cohort-level retention data at Level 2 and above under the FFI Standard, not from an assumed average lifespan. A lifetime value calculation that uses revenue rather than gross profit, or that uses an assumed lifespan rather than observed cohort retention, does not satisfy the requirements of this Standard.
Common Misapplication
The most common misapplication is calculating lifetime value using total revenue per customer without deducting the cost of goods sold attributable to serving that customer. A customer who generates one thousand pounds of revenue but requires six hundred pounds of direct delivery cost has a gross-profit-based lifetime value contribution of four hundred pounds, not one thousand pounds. Using revenue inflates the metric and overstates the LTV to CAC ratio.
FFI Standard Reference
This term is defined and applied in Book 2, Section 2.2: The Unit Economics Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Lifetime Value. https://ffistandard.org/glossary/lifetime-value/. 2026.