LTV (Lifetime Value) is the total revenue you expect from a user across their entire relationship with your app. It is the number that tells you how much a user is worth, which in turn sets the ceiling on what you can profitably spend to acquire one. Get LTV right and your growth math holds. Get it wrong and you either overspend into losses or underspend and stall.

How to calculate LTV

LTV = Average sale value x Number of transactions x Average retention time
or:  LTV = ARPDAU x Average customer lifetime (in days)

LTV = Average sale value x Number of transactions x Average retention time
or:  LTV = ARPDAU x Average customer lifetime (in days)

LTV = Average sale value x Number of transactions x Average retention time
or:  LTV = ARPDAU x Average customer lifetime (in days)

The two forms describe the same idea from different angles. The first builds LTV from purchases; the second builds it from daily revenue and how long users stay.

A worked example

Suppose your ARPDAU (Average Revenue Per Daily Active User) is $0.10 and the average user stays active for 120 days:

$0.10 x 120 = $12.00 LTV

$0.10 x 120 = $12.00 LTV

$0.10 x 120 = $12.00 LTV

If you can acquire a comparable user for less than $12, growth is profitable. If it costs more, you are buying users at a loss.

What counts as a good LTV?

There is no universal figure, because LTV only means something next to acquisition cost. A $12 LTV is strong if users cost $4 and weak if they cost $15. The benchmark that matters is the gap between LTV and what you pay to acquire, tracked for your own app over time.

LTV also comes in two flavors that are easy to confuse. Historical LTV sums the revenue a cohort has already generated. Predicted LTV estimates where that cohort will end up, based on early behavior. User acquisition runs on the predicted figure, because you have to decide how much to bid long before a user's lifetime is over, so the quality of that prediction shapes every buying decision.

Why LTV drives UA

Your LTV has to exceed your cost to acquire a user (CPI or CAC) for growth to be profitable. The higher your LTV, the more you can afford to spend on user acquisition and still come out ahead. This is why raising LTV is often the highest-leverage growth move available: it widens the margin on every user you buy.

How to improve LTV

• Raise retention so users stay active for more days and generate revenue for longer.

• Increase revenue per user across ads and purchases, which lifts the daily figure LTV is built on.

• Add an offerwall so non-paying users start contributing revenue instead of none.

Raising LTV with an offerwall

Adding an offerwall increases the revenue you earn per user, especially the non-paying majority, which raises LTV across the board. A higher LTV, in turn, unlocks more aggressive, still-profitable growth. RevU's offerwall is built to earn from users who never buy, so the extra revenue lands where most apps leave money on the table.

Common mistakes to avoid

• Reading LTV without acquisition cost. A big LTV means little if users cost more than they return.

• Assuming one LTV for everyone. Users from different channels and countries can have very different lifetime value.

• Freezing early estimates. Predicted LTV should be updated as real retention and revenue data come in.