What is app LTV?
The LTV or Lifetime Value of a user is the average revenue they generate from all the app monetization streams throughout their lifespan of using the app. In other terms, LTV is the monetary value of an app user.
How is LTV calculated?
The average LTV of a user is calculated as follows:
Average LTV = Total lifetime revenue / Total users
Why is LTV important?
By calculating the LTV, you can:
- Estimate how much an acquired user will generate
- Calculate the scaling potential
- Predict how much to spend on user acquisition while still earning a profit
- Understand when you can stop promoting an app without new updates
- Optimize revenue to increase profits