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Start your free trialLaura Mora Freeman
8,192 PointsWhat is our net LTV if we have: a monthly ARPU of $10, a gross monthly churn rate of 12%, and COGS of 10%?
What is our net LTV if we have: a monthly ARPU of $10, a gross monthly churn rate of 12%, and COGS of 10%? Round your number to the nearest whole dollar (do not include any cent values):
The formula says LTV = 1/churn*ARPU
When i do it i get an error, could you help me clarify this.
Thank you.
1 Answer
Caleb Kemp
12,755 PointsYou're really cranking away through these things
For the example, we will use the following values. ARPU $20, COGS 10%, and a gross monthly churn rate of 15%. Now to solve with those values
Here is the formula we will need to use to solve this
LTV = NET ARPU/churn rate.
(Where churn rate stands for "gross monthly churn rate)
We are not given NET ARPU so we will have to solve for it.
NET ARPU = ARPU - (ARPU * COGS)
Now to insert the values from the example
NET ARPU = $20 - ($20 * .10)
Note*(10% is the same as written 10/100 or 1/10, which is why we used .10)
NET ARPU = $20 - $18
-> NET ARPU = $18
Now we can plug this into the first formula
LTV = NET ARPU/churn rate
Now to plug in our numbers
LTV = $18/.15
LTV = $120
HURRAH!!
I know this is quite a bit more complicated than the last ones you solved, but I think you got this. Good luck, let me know if it gives you any more trouble.
Laura Mora Freeman
8,192 PointsLaura Mora Freeman
8,192 PointsThank you so much!!
Caleb Kemp
12,755 PointsCaleb Kemp
12,755 PointsGlad to hear it helped