App LTV: Calculate Lifetime Value

App LTV is the cumulative revenue from an install cohort divided by the number of users who started in that cohort. For subscription apps, use observed revenue over a stated period so the result reflects renewals and refunds that have actually happened.

App LTV formula for subscriptions

Observed app LTV = cumulative cohort revenue ÷ original cohort installs. The cohort and observation window belong with the result: a 30-day LTV and a 12-month LTV describe different amounts of time.

Use installs as the denominator when measuring value per acquired user. If you divide by paying subscribers instead, you are calculating revenue per payer, which excludes people who installed but never subscribed.

A common alternative is LTV ≈ ARPU ÷ churn rate. That estimates lifetime revenue from an average revenue per user and an assumed churn rate; it is not observed cohort LTV. It depends on churn staying representative and on the ARPU and churn definitions using compatible periods. For a result grounded in actual app history, use cumulative cohort revenue instead.

Calculate observed LTV from a cohort

Choose an install cohort, count its original installs, and total the revenue linked to those users through the end of the period you want to measure. Divide that total by the cohort’s original installs. Include subscription renewals from those users, not renewals from subscribers acquired in other cohorts.

ActivationPal’s onboarding funnel analytics connects app events with RevenueCat or Superwall subscription events. Its cohort view reports cumulative gross revenue per install for each install cohort over time; multiply that cohort ARPU by the cohort’s installs to recover its cumulative revenue total. The cohort ARPU is gross, before refunds and store fees. See ActivationPal for the product overview.

Handle refunds and store fees consistently

State whether the result is gross or net. Gross cohort revenue is before refunds and store fees. Net revenue subtracts refunds from gross.

Refunds can arrive after the original purchase. Use the same revenue definition and observation window across cohorts, and assign refunds using the reporting convention applied to each cohort.

Trials are not revenue. Count a subscription’s paid revenue when it occurs, and include later renewals in the cohort that acquired the subscriber. That keeps trial starts, conversions and cash revenue as separate measures.

Compare app LTV with CPI

Compare LTV and cost per install for the same acquisition cohort, platform, geography and time window. If observed LTV is below CPI, the cohort has not yet earned back its acquisition cost on that revenue basis. If it is above CPI, the difference is revenue remaining before other costs such as operating expenses.

Use an observation window long enough to include the renewals relevant to the decision. A newer cohort has had less time to generate subscription revenue, so compare cohorts at the same age rather than treating a partial period as a complete lifetime result. For the acquisition side of the comparison, see how to calculate app CPI and payback.

The ARPU calculator helps calculate revenue per user, while the app revenue calculator models revenue from your own inputs. Keep those scenario results separate from LTV measured from actual cohort revenue.