What is Lifetime Value?
Mobile lifetime value, also referred to as lifetime value, LTV for short, is an essential app metric, which estimates the total amount of revenue a user will generate for an app, from now until the end of time.
Put simply, LTV measures the monetary value that each user represents to your business. This monetary value is estimated using in-app purchases and in-app advertising data. Using the mobile LTV metric, app marketers can determine the success of their monetization efforts.
Lifetime Value Calculation
To calculate LTV, follow this simple, four-step process:
- Determine your users’ average purchase value.
- Calculate the average number of purchases per user.
- Measure your user retention rate.
- Plug the data you just uncovered into an LTV formula
LTV Formula
One of the most common LTV formulas is:
LTV = (Average Purchase Size) x (Number of Purchases) x (Retention Period)
There are a few things you can do to boost your LTV metrics, such as focusing more energy on user retention, selling more ad space, and offering more in-app purchases.
