A Smart Bear · Jason Cohen
articleprincipleWhy I don't like the LTV metric (LifeTime Value)
7 October 2013Profit
Source excerpt
About A Smart BearThe LTV metric overcomplicates and misleads. Learn why you should use other SaaS metrics instead.
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Apollo layer
What a founder can learn
Founder takeaway
Treat LTV cautiously rather than as a definitive measure of SaaS economics. Its complexity can obscure assumptions and produce misleading confidence; favor simpler, directly observable metrics when making decisions.
Why it matters
If acquisition, pricing, or investment decisions depend on a fragile LTV estimate, small assumption errors can lead founders to allocate scarce capital poorly.
Relevant guides
Put it to work
Choose one decision currently justified by LTV. List every assumption behind the calculation, then ask: which directly observed SaaS metrics could support this decision with fewer assumptions?
Private notes