The Most Important Metric In App Analytics
And How To Calculate It!
Lifetime Value, often shortened to LTV, is the measure
of the revenue a customer will bring during their
lifetime of using your application.
Many, including 100% of the 60 developers we
surveyed, say it is the most vital number you need to
know about your business.
Customer Churn: This is the rate at which you lose customers
during a given period, normally measured monthly. It is the
number of people who left your app, expressed as a percentage
of the number of people who could have left.
Average Revenue Per User: This is the revenue you generate,
on average, from each user of your application. This can
be calculated by adding up the revenue you generate each
month, and dividing it by the total number of users.
The formula for calculating LTV is pretty simple. It is:
An example - Data
Aperture Apps has 1,000 users of its popular application. From
advertising and selling some simple In-App Purchase items, it makes $500
per month. Each month it loses 300 users of its application from the pool of
people who were using it the month before.
With these numbers we can work out ARPU and Churn, and therefore
ARPU = Monthly Revenue from Users / Monthly Number of Users = $500 /
1,000 = $0.50
Churn = Percentage of people who could leave and did leave = 300 out of
1000 = 30%
We can now pipe this data into our LTV formula.
An example - Formula
If we pipe the information from the previous slide into the LTV
formula, we get:
Which shows us that we have an LTV of $1.67.
It’s that easy!
The lifetime value of an Aperture Apps customer.
Got a Question?
Read more about LTV on the Tapdaq blog.