A simple formula
LTV ≈ ARPU per month × average user lifetime in months
With monthly churn rate, the average lifetime is roughly 1 ÷ churn. So an app with $2 monthly ARPU and 10% monthly churn has an LTV of about $2 × 10 = $20.
More precise models work with cohorts, gross margin and the store fee.
Why it matters
LTV is the ceiling for what you can pay to acquire a user. If LTV is $20 and your cost per install is $25, every paid install loses money. Many teams look at the LTV:CAC ratio (lifetime value to customer acquisition cost) to judge user acquisition campaigns.
How to raise LTV
- Improve retention — longer lifetimes compound.
- Reduce churn by fixing the reasons users leave; app reviews are a direct source.
- Better monetization: pricing, annual plans, upgrades.
Example
A fitness app learns from reviews that users cancel when they run out of workouts. Adding new programs monthly cuts churn from 12% to 9% and raises LTV by a third.