analytics

Lifetime Value (LTV)

The total revenue or economic value a user generates over their entire relationship with your app, from first download through eventual churn.

cost per install retention rate in app purchase

Lifetime Value (LTV) is the most important business metric for mobile apps. It determines how much you can afford to spend on acquisition, which features to prioritize, and whether your business model is sustainable.

How LTV Is Calculated

The simplest LTV formula:

LTV = Average Revenue Per User (ARPU) x Average User Lifespan

More sophisticated models account for retention curves, conversion rates from free to paid, subscription renewal rates, and time-value of money.

LTV and Acquisition Strategy

LTV sets the ceiling for your Cost Per Install. If your average user generates $6 in LTV, you cannot sustain a CPI above $6 without losing money. In practice, profitable apps maintain a LTV-to-CPI ratio of at least 3:1 to account for overhead and reinvestment.

Factors That Influence LTV

  • Retention rate - users who stay longer generate more value
  • Monetization model - subscriptions produce predictable, recurring LTV
  • Engagement depth - deeper engagement leads to higher purchase rates
  • Acquisition channel - organic users often have higher LTV than paid users

LTV by Acquisition Source

Track LTV separately for each acquisition channel. Users acquired through App Clips, organic search, paid ads, and referrals may have very different lifetime values. This data helps you allocate budget to channels that produce the highest-value users, not just the cheapest installs.