LTV (Lifetime Value)

LTV: what is it?

Lifetime value is the number that reframes every other decision in a coaching business. A coach thinking in monthly price sees a client worth 120. A coach thinking in LTV sees a client worth 120 a month for an average of nine months, and suddenly a two-hour free consultation, a referral bonus or a better onboarding all look like obvious investments rather than costs. LTV is also the number that makes the case for retention work in a language a business plan understands.

Calculating LTV

For recurring coaching, the simplest usable formula is the monthly price a client pays divided by your monthly churn rate. As an example: a client on a 120 per month subscription, with a monthly churn rate of 10%, gives an LTV of 120 divided by 0.10, so 1,200.

For coaches selling packs rather than subscriptions, use average pack value multiplied by the average number of packs a client buys. Either way, use revenue you actually collect, and if you want the honest picture, use gross margin instead of revenue: subtract payment fees, your software costs and anything you pay out per client.

The three levers, and which one is cheapest

LTV moves on exactly three things: what a client pays, how long they stay, and how much extra they buy. Raising price is the fastest and most uncomfortable. Extending tenure is the most durable and compounds with everything else. Adding a second service, nutrition alongside training for instance, raises both the monthly figure and often the tenure, because a client using more of what you provide is harder to replace.

The trap is treating them as independent. A price rise that pushes churn up can leave LTV flat or lower. Model both together before you move a price.

LTV against acquisition cost

LTV only becomes actionable next to what a client costs you to acquire, including your own unpaid hours spent on content, calls and free consultations. The ratio between the two decides whether marketing is an investment or a leak, and the payback period, how many months until a client has repaid their acquisition cost, decides whether you can afford to grow at all with the cash you have.

• Count your time in acquisition cost. Ten hours of content a week is not free.
• Referrals typically carry a much lower acquisition cost, which is why they are worth a formal program.
• A long payback period is survivable on a subscription and dangerous on packs.
• Segment LTV by how the client found you: sources differ more than most coaches expect.

Using LTV without fooling yourself

LTV is a projection built on a churn rate, and on a roster of twenty clients that churn rate is a small, noisy sample. Treat the output as an order of magnitude, not a forecast: it is there to tell you whether a referral bonus is affordable, not to be reported to two decimal places. Recompute it every quarter, and if you have distinct offers, compute it per offer rather than blending a 40 per month app-only tier with a 300 per month hybrid package.