Lifetime Value (LTV)

Lifetime Value (LTV) is a metric used to estimate the average revenue generated by an individual app user or customer over their entire lifespan, regardless of whether they are a free user or paying customer. LTV provides insights into user profitability and helps marketers make informed decisions regarding user acquisition costs.
Calculating LTV varies based on the app's payment model, be it paid, ad-supported, or subscription-based.
By understanding the user's lifetime value and acquisition cost, marketers can determine the time needed to recoup upfront advertising expenses and forecast their expected profit from each customer throughout their lifespan.
Predicting LTV successfully empowers marketers to optimize their advertising spending, make informed choices, and scale their marketing budgets. Users with high LTV exhibit strong retention rates, actively contribute to app revenue, and are crucial for overall success.