LTV

Definition

LTV (Lifetime Value) estimates the total revenue a single subscriber will generate from the moment they subscribe until they cancel. For subscription apps, LTV is typically calculated as ARPPU divided by monthly churn rate — for example, a $10/month subscriber with 5% monthly churn has an LTV of $200 (expected lifetime of 20 months).

LTV is the most important number for growth strategy because it determines your maximum cost per acquisition (CPA). If LTV is $200, you can profitably spend up to $200 to acquire a subscriber. LTV/CAC (Customer Acquisition Cost) ratios above 3:1 are generally considered healthy for subscription businesses.

Examples

• A $15/month plan with 4% monthly churn gives LTV = $15 / 0.04 = $375 per subscriber. This means the app can spend up to ~$125 on ads (at 3:1 LTV/CAC) to acquire each subscriber.
• Reducing churn from 5% to 4% increases LTV by 25% — from $200 to $250 on a $10 plan. Small retention improvements compound into large revenue gains.
• Win-back offers increase LTV by extending the subscriber lifecycle beyond the initial cancellation event.