lifetime value metrics for subscription / a la businesses

8/14/2019 Lifetime Value Metrics for Subscription / a La Businesses

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Summary

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Author blog:

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Daniel James (Three Rings)

1/18/2009

Distributed for free under GNU Free Documentation License - http://www.gnu.org/copyleft/fdl.html

businesses

(How does cost-per-acquisition compare to your lifetime-value)

Based on the retention rate, ARPU, and registration funnel, what is your LTV? And can you re-invest tha

LTV cash profitably to acquire more users via paid acquisition?Andrew Chen ([email protected])

http://andrewchenblog.com

http://thefloggingwillcontinue.com

If you have questions, anything to add, or want to generally chat, don't hesitate to reach me at my e-mail address, voodoo [at] gmail --Andrew Chen
mailto:[email protected]://andrewchenblog.com/http://thefloggingwillcontinue.com/http://thefloggingwillcontinue.com/http://andrewchenblog.com/mailto:[email protected]


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Paid user acquisition model

Source CPM CPC CPA Impressions CTR Clicks

Google $1.00 1,000,000 3.13% 31300

Ad.com $1.00 2,000,000 0.50% 10000

Total 3,000,000 1.38% 41300


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Signup % Registered users Cost CPA

10% 3130 $31,300 $10.00

20% 2000 $2,000 $1.00

12% 5130 $33,300.00 $6.49


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Free-to-pay conversion 10%

CPA (unadjusted for virali $6.49

New registered uu / week 5,130Ad spend increase % 5%

Viral growth kicker 0.8

invite conversion rate % 15%

avg invites 5.00

time period viral acq users bought users1 5,130

2 3,848 5,387

3 6,926 5,656

4 9,436 5,939

5 11,531 6,236

6 13,325 6,547

7 14,904 6,875

8 16,334 7,218

9 17,664 7,579

10 18,933 7,958

11 20,168 8,356

12 21,393 8,774

13 22,626 9,213

14 23,879 9,673

15 25,164 10,157

16 26,491 10,66517 27,867 11,198

18 29,299 11,758

19 30,793 12,346

20 32,354 12,963

400,000

500,000

600,000

ers


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1 2 3 4 5 6

-

100,000

200,000

300,000

Totalu


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ser funnel and simple virality

ad spend total new users paying users cumultative users$33,300.00 5,130 513 5,130

$34,965.00 9,234 923 14,364

$36,713.25 12,581 1,258 26,945

$38,548.91 15,375 1,537 42,320

$40,476.36 17,767 1,777 60,086

$42,500.18 19,872 1,987 79,959

$44,625.18 21,779 2,178 101,737

$46,856.44 23,553 2,355 125,290

$49,199.27 25,244 2,524 150,534

$51,659.23 26,891 2,689 177,425

$54,242.19 28,525 2,852 205,950

$56,954.30 30,167 3,017 236,117

$59,802.02 31,838 3,184 267,955

$62,792.12 33,552 3,355 301,507

$65,931.72 35,321 3,532 336,829

$69,228.31 37,156 3,716 373,984$72,689.72 39,065 3,906 413,049

$76,324.21 41,057 4,106 454,106

$80,140.42 43,139 4,314 497,245

$84,147.44 45,317 4,532 542,562

Cumulative users over time


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7 8 9 10 11 12 13 14 15 16 17

Time period


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cum. paying users adj CPA513 $6.49

1,436 $3.79

2,695 $2.92

4,232 $2.51

6,009 $2.28

7,996 $2.14

10,174 $2.05

12,529 $1.99

15,053 $1.95

17,742 $1.92

20,595 $1.90

23,612 $1.89

26,796 $1.88

30,151 $1.87

33,683 $1.87

37,398 $1.8641,305 $1.86

45,411 $1.86

49,724 $1.86

54,256 $1.86


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retention rate % 80%

Paying user retention matrix1 2 3 4 5 6

Time-period cohorts

1 513 410 328 263 210 168

2 923 739 591 473 378

3 1,258 1,007 805 644

4 1,537 1,230 984

5 1,777 1,421

6 1,987

7

8

9

10

11

12

13

14

15

16

17

18

19

20

paying users 513 1,334 2,325 3,398 4,495 5,583

Total users (paying and free) reten1 2 3 4 5 6

Time-period cohorts

1 5,130 4,104 3,283 2,627 2,101 1,681

2 9,234 7,387 5,910 4,728 3,782

3 12,581 10,065 8,052 6,442

4 4,232 3,386 2,708

5 17,767 14,213

6 19,872

7

8

9

10

11

12

13

14

15


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16

17

18

19

20

paying users 5,130 13,338 23,252 22,833 36,033 48,699


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User retention

Time period

7 8 9 10 11 12 13 14

134 108 86 69 55 44 35 28

303 242 194 155 124 99 79 63

515 412 330 264 211 169 135 108

787 630 504 403 322 258 206 165

1,137 910 728 582 466 373 298 238

1,590 1,272 1,017 814 651 521 417 333

2,178 1,742 1,394 1,115 892 714 571 457

2,355 1,884 1,507 1,206 965 772 617

2,524 2,020 1,616 1,292 1,034 827

2,689 2,151 1,721 1,377 1,101

2,852 2,282 1,826 1,460

3,017 2,413 1,931

3,184 2,547

3,355

6,644 7,671 8,661 9,618 10,547 11,454 12,347 13,233

ion matrix7 8 9 10 11 12 13 14

1,345 1,076 861 689 551 441 353 282

3,026 2,421 1,937 1,549 1,239 991 793 635

5,153 4,123 3,298 2,638 2,111 1,689 1,351 1,081

2,167 1,733 1,387 1,109 888 710 568 454

11,371 9,096 7,277 5,822 4,657 3,726 2,981 2,385

15,898 12,718 10,175 8,140 6,512 5,209 4,168 3,334

21,779 17,423 13,938 11,151 8,921 7,136 5,709 4,567

23,553 18,842 15,074 12,059 9,647 7,718 6,174

25,244 20,195 16,156 12,925 10,340 8,272

26,891 21,513 17,210 13,768 11,015

28,525 22,820 18,256 14,605

30,167 24,134 19,307

31,838 25,471

33,552


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60,738 72,143 82,958 93,258 103,131 112,672 121,976 131,133


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15 16 17 18 19 20

23 18 14 12 9 7

51 41 32 26 21 17

86 69 55 44 35 28

132 106 85 68 54 43

191 153 122 98 78 63

267 213 171 137 109 87

365 292 234 187 150 120

494 395 316 253 202 162

662 529 424 339 271 217

881 705 564 451 361 289

1,168 935 748 598 479 383

1,545 1,236 989 791 633 506

2,038 1,630 1,304 1,043 835 668

2,684 2,147 1,718 1,374 1,099 880

3,532 2,826 2,261 1,808 1,447 1,157

3,716 2,972 2,378 1,902 1,522

3,906 3,125 2,500 2,000

4,106 3,285 2,628

4,314 3,451

4,532

14,118 15,010 15,915 16,837 17,784 18,759

15 16 17 18 19 20

226 180 144 116 92 74

508 406 325 260 208 166

865 692 553 443 354 283

364 291 233 186 149 119

1,908 1,526 1,221 977 781 625

2,667 2,134 1,707 1,366 1,092 874

3,654 2,923 2,338 1,871 1,497 1,197

4,939 3,951 3,161 2,529 2,023 1,619

6,618 5,294 4,235 3,388 2,711 2,168

8,812 7,049 5,639 4,512 3,609 2,887

11,684 9,347 7,478 5,982 4,786 3,829

15,446 12,357 9,885 7,908 6,327 5,061

20,377 16,301 13,041 10,433 8,346 6,677

26,842 21,473 17,179 13,743 10,994 8,795

35,321 28,257 22,606 18,084 14,468 11,574


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37,156 29,725 23,780 19,024 15,219

39,065 31,252 25,002 20,001

41,057 32,845 26,276

43,139 34,511

45,317

140,227 149,338 158,535 167,885 177,446 187,274


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Revenue versus

Revenue mix Avg rev %Hardcore $25.00 10%

Subscription $7.99 40%

Casual / A la carte $1.50 50%

Rev/paying $6.45

Cost of service $0.10

Time period 1 2 3 4

Paying users 513 1334 2325 3398

Total users 5130 13338 23252 22833

Revenue $3,307 $8,598 $14,988 $21,901

Ad spend $33,300 $34,965 $36,713 $38,549

Cost of service $513 $1,334 $2,325 $2,283

Total cost $33,813 $36,299 $39,038 $40,832

Profit per user $(59.47) $(20.77) $(10.34) $(5.57)

1 2

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000


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d spend

5 6 7 8 9 10

4495 5583 6644 7671 8661 9618

36033 48699 60738 72143 82958 93258

$28,973 $35,988 $42,829 $49,445 $55,828 $61,997

$40,476 $42,500 $44,625 $46,856 $49,199 $51,659

$3,603 $4,870 $6,074 $7,214 $8,296 $9,326

$44,080 $47,370 $50,699 $54,071 $57,495 $60,985

$(3.36) $(2.04) $(1.18) $(0.60) $(0.19) $0.11

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Ad spend versus Revenue

Reven

Total


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11 12 13 14 15 16

10547 11454 12347 13233 14118 15010

103131 112672 121976 131133 140227 149338

$67,984 $73,833 $79,590 $85,299 $91,008 $96,757

$54,242 $56,954 $59,802 $62,792 $65,932 $69,228

$10,313 $11,267 $12,198 $13,113 $14,023 $14,934

$64,555 $68,221 $72,000 $75,905 $79,954 $84,162

$0.33 $0.49 $0.61 $0.71 $0.78 $0.84

ue

ost


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17 18 19 20

15915 16837 17784 18759

158535 167885 177446 187274

$102,587 $108,535 $114,635 $120,919

$72,690 $76,324 $80,140 $84,147

$15,854 $16,788 $17,745 $18,727

$88,543 $93,113 $97,885 $102,875

$0.88 $0.92 $0.94 $0.96


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Lifetime value

Paying users LTVTime period 1 2 3 4 5

Paying users 513 410 328 263 210

User periods 2535

Rev/paying user $6

Aggr LTV $16,343

LTV for paying user $31.86

New users conv % 10%

New (unregistered) users LTVTime period 1 2 3 4 5

New users 5130 4104 3283 2627 2101

User periods 25354

Aggr LTV $16,343

LTV for new users $3.19


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6 7 8 9 10 11 12

168 134 108 86 69 55 44

6 7 8 9 10 11 12

1681 1345 1076 861 689 551 441


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13 14 15 16 17 18 19

35 28 23 18 14 12 9

13 14 15 16 17 18 19

353 282 226 180 144 116 92


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lifetime value metrics for subscription / a la businesses

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