Lifetime value (LTV)
Monetisation metric. Do they pay, and is it worth what they cost?
What is lifetime value?
Lifetime value (LTV) is the total revenue, or gross profit, a user is expected to bring in over their whole time with an app.
LTV horizon: the number of days of revenue counted, such as D30 or D365 LTV.
LTV to CAC: lifetime value divided by acquisition cost; above 1 on a margin basis means a customer is worth more than they cost.
How to calculate LTV
LTV = ARPU per month × Gross margin ÷ Monthly churn- ARPU per month
- average revenue per active user per month
- Gross margin
- share of revenue left after app store fees and direct costs; use 100% for revenue LTV
- Monthly churn
- share of users lost each month
Where definitions differ
| Variant | Formula | When to use it |
|---|---|---|
| Churn-based LTV | ARPU ÷ Churn (× Gross margin) | Quick, but assumes steady ARPU and churn. |
| Cohort (realised) LTV | Revenue from a cohort by day n ÷ Installs in the cohort | D30, D90 or D365 LTV; based on what actually happened, so it is the safer input for bids. |
| Retention-based LTV | ARPDAU × Sum of the retention curve (expected active days) | Common in games. |
| Predicted LTV | A model's forecast from early behaviour | Useful early; check it against realised cohort LTV. |
LTV calculator
Example inputs: change them to your own numbers. The examples only make the calculator show a worked answer; they are not benchmarks or targets. Runs in your browser; nothing you type is sent anywhere.
- Revenue LTV
- $62.50
- Gross margin LTV
- $43.75
- Margin LTV to CAC
- 1.75x
How do you calculate LTV for a mobile app?
The quickest way is monthly ARPU times gross margin divided by monthly churn. For paid acquisition decisions, the cohort way is more reliable: add up the revenue a cohort has actually produced by day 30, 90 or 365 and divide by the installs in that cohort.
How LTV differs by vertical
| EdTech | Renewals and next-course purchases make the horizon long; cohort LTV at D90 and D365 is common. |
|---|---|
| Fintech | Revenue arrives slowly (fees, interest); long horizons and margin LTV matter most. |
| OTT and streaming | Subscription price × margin ÷ churn is a reasonable first estimate. |
| Gaming | ARPDAU times expected active days, or cohort LTV at D7, D30 and D90. |
Common mistakes
- Comparing revenue LTV with fully loaded CAC.
- Using a churn-based LTV when churn is still falling for young cohorts.
- Quoting LTV without a horizon or a revenue basis.
Questions
What is the simplest LTV formula?
Monthly ARPU divided by monthly churn gives revenue LTV. Multiply by gross margin for a profit-based LTV. With $5 ARPU, 70% margin and 8% churn, that is $62.50 revenue LTV or about $44 margin LTV.
What is cohort LTV?
It is the revenue an install cohort has actually generated by a given day, divided by its installs. Because it uses observed revenue, it is the basis most UA teams use for bids and ROAS targets.
Should LTV be revenue or profit?
Use gross margin LTV when comparing with CAC or deciding what you can pay for a user. Revenue LTV overstates what a user is worth.
Do I need an MMP to measure these metrics?
Not for all of them. Engagement and monetisation metrics come from product analytics and billing data, while metrics split by ad channel, such as CPI, ROAS or retention by source, need installs attributed to campaigns.
Are the calculator's example inputs benchmarks?
No. The example inputs only make the calculator show a worked answer when the page loads; they are not typical, good or target values. Replace them with your own numbers.
Does the calculator send my numbers anywhere?
No. It runs entirely in your browser, and nothing you type is stored or sent anywhere.