Lifetime Value (LTV)

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

How LTV Is Calculated

The simplest LTV formula:

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

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

LTV and Acquisition Strategy

LTV sets the ceiling for your Cost Per Install (CPI). If your average user generates $6 in lifetime value, you cannot sustain a CPI above $6 without losing money. In practice, profitable apps maintain an LTV-to-CPI ratio of at least 3:1 to cover 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 often show different lifetime values. This data helps you allocate budget to channels that produce the highest-value users, not the cheapest installs.