LTV Calculator – The Naive method

customer LTV calculations can be confusing for an app developer doing it for the first timeThis is the 1st post in a series of 6 posts. Here is a summary post explaining all the different calculators.

The customer LTV calculation method shown in this post is rather simple and is the most naive way to calculate the lifetime revenue per user.

Explanation of the customer LTV calculator

Inputs:

  • ARPDAU – this is the average daily revenue per user – simply take the daily revenue in the segment (or for all users) and divide by the number of active users that day.
  • Expected Lifetime – this is how long you users will likely to use the app – you can estimate that based on other apps or just wait until the users stop showing up.

Outputs:

  • Estimated LTV per user

Pros:

  • Simple
  • Good to get a sense of the customer LTV rather than for real optimizations

Cons:

  • This method is a bit too simplistic and assumes all users stay the same period of time
  • There is no way to know in advance how long users will stay

More methods to calculate user value

Here is a more advanced method to calculate the CLV based on limited retention data

You can also model out LTV in one segment based on data from other segments

Q2 2019 AD LTV BENCHMARKS

Explanation of the customer LTV calculator

Inputs:

  • ARPDAU – this is the average daily revenue per user – simply take the daily revenue in the segment (or for all users) and divide by the number of active users that day.
  • Expected Lifetime – this is how long you users will likely to use the app – you can estimate that based on other apps or just wait until the users stop showing up.

Outputs:

  • Estimated LTV per user

Pros:

  • Simple
  • Good to get a sense of the customer LTV rather than for real optimizations

Cons:

  • This method is a bit too simplistic and assumes all users stay the same period of time
  • There is no way to know in advance how long users will stay

More methods to calculate user value

Here is a more advanced method to calculate the CLV based on limited retention data

You can also model out LTV in one segment based on data from other segments

Last but not least don’t forget to look at the Ad LTV Benvhmarks report as well.

Feel free to share:
Previous articleCLV Calculation by Modeling Lifetime Function
Next article6 CLV (LTV) Calculators for Mobile Apps
Raised in the Kibbutz and reborn in the city, Yaniv is a certified entre-parent-neur. When he’s not busy doing SEO, content marketing, administration, QA, fund raising, customer support… [stop to breathe], you can find Yaniv snowboarding down the slopes of France and hiking with his kids. Yaniv holds a B.Sc. in Computer Science and Management from Tel Aviv University. He is also an avid blogger and a speaker at industry events. Before SOOMLA, Yaniv co-founded EyeView

4 COMMENTS

Leave a Reply to Ultimate Guide to Measuring Social Media ROI | Your Right Time for Internet Marketing Cancel reply

Please enter your comment!
Please enter your name here