Lifetime value metrics for subscription / a la

businesses
Summary

Author:

Author blog:

Last updated:
License
Note:

This spreadsheet lets you play around with your viral growth, how your revenue sourc
how your financial model interacts with your paid user acquisition strategy (namely: b
when it costs less than their Lifetime Value [LTV]). Try it out by changing the variable
VARIABLES page!

fetime value metrics for subscription / a la carte

businesses
v1: Based on the retention rate, ARPU, and registration funnel, what is your LTV? And can you reinvest that LTV cash profitably to acquire more users via paid acquisition?
v2: With evidence from the growth of social networks, the viral growth model was changed to a
more accurate population growth equation. The "OVERVIEW + VARIABLES" sheet was added to
quickly alter variables and show the results to interested parties (or potential investors).
Aidan Nulman (aidan@youphonics.com)
Andrew Chen (voodoo@gmail.com)
Daniel James (Three Rings)
http://youphonics.posterous.com
http://andrewchenblog.com
http://thefloggingwillcontinue.com
4/27/2010
Distributed for free under GNU Free Documentation License - http://www.gnu.org/copyleft/fdl.html
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
Likewise! aidan [at] youphonics. Also, if you're looking for a template for your pitch deck, benefit
from my research and download this spreadsheet's companion at http://aidannulman.com/2010pitch-template --Aidan Nulman

readsheet lets you play around with your viral growth, how your revenue sources work, and
ur financial model interacts with your paid user acquisition strategy (namely: buy users
costs less than their Lifetime Value [LTV]). Try it out by changing the variables on the
LES page!

PAID USER ACQUISITION

USER METRICS

Monthly ad spend increase

Population
Pop. at Day 0
Carrying constant
Growth rate
Retention rate

5%

Google
CPC
# of impressions
CTR
Signup %

$1.00
25,000
1.0%
10%

Ad.com
CPM
# of impressions
CTR
Signup %

1000
100,000,000
30%
80%

Miscellaneous
Free-to-pay conversion
Cost of service (per user)

1%
$0.68

$1.00
250,000
0.5%
20%

Ad spend versus Revenue

$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
1

10

11

12

13

14

15

16

REVENUE MODEL
Pro
Average monthly revenue
Adoption rate (% of total paid)

$10.00
90.0%

Partner
Average monthly revenue
Adoption rate (% of total paid)

$15.00
8.0%

More options can be added

Average monthly revenue
More adoption (% of total paid)

$2,000.00
2.0%

Revenue
Total cost

16

17

18

19

20

21

22

23

24

Paid user acquisition model

Source
Google
Ad.com

CPM

CPC
$1.00

CPA

$1.00
Total

Impressions
25,000
250,000

CTR
1.00%
0.50%

Clicks
250
1250

275,000

0.55%

1500

odel
Signup % Registered users
10%
25
20%
250
18%

275 $

Cost

CPA
$10.00
$1.00

$250
$250
500.00

1.82

User funnel a
Free-to-pay conversion

1%

CPA (unadjusted for virality)

$
New registered uu / week
Ad spend increase %
Carrying constant
Growth rate

1.82
275
5%
100,000,000
30.00%

time period
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

900,000
800,000
700,000

viral acq users

1,000
382
584
850
1,200
1,661
2,264
3,054
4,086
5,433
7,190
9,481
12,464
16,347
21,401
27,973
36,519
47,623
62,046
80,769
105,056
136,535
177,292
229,990

bought users
275
289
303
318
334
351
369
387
406
427
448
470
494
519
544
572
600
630
662
695
730
766
804
845

Total users

600,000
500,000
400,000
300,000
200,000
100,000
1

User funnel and simple virality

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

ad spend
500.00
525.00
551.25
578.81
607.75
638.14
670.05
703.55
738.73
775.66
814.45
855.17
897.93
942.82
989.97
1,039.46
1,091.44
1,146.01
1,203.31
1,263.48
1,326.65
1,392.98
1,462.63
1,535.76

total new users

1,275
671
887
1,168
1,535
2,012
2,633
3,441
4,492
5,860
7,638
9,951
12,958
16,866
21,945
28,545
37,119
48,253
62,708
81,464
105,785
137,301
178,096
230,835

paying users
cumulative users
13
1,275
7
1,946
9
2,833
12
4,002
15
5,536
20
7,548
26
10,181
34
13,622
45
18,114
59
23,974
76
31,612
100
41,563
130
54,521
169
71,387
219
93,332
285
121,877
371
158,996
483
207,250
627
269,957
815
351,421
1,058
457,206
1,373
594,507
1,781
772,604
2,308
1,003,439

Cumulative users over time

10

11

12

13

Time period

14

15

16

17

18

19

20

cum. paying users

13
19
28
40
55
75
102
136
181
240
316
416
545
714
933
1,219
1,590
2,072
2,700
3,514
4,572
5,945
7,726
10,034

adj CPA
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

0.39
0.78
0.62
0.50
0.40
0.32
0.25
0.20
0.16
0.13
0.11
0.09
0.07
0.06
0.05
0.04
0.03
0.02
0.02
0.02
0.01
0.01
0.01
0.01

20

21

22

23

retention rate %

80%

Paying user retention matrix

Time-period cohorts

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
paying users

1
13

2
10
19

3
8
16
28

4
7
12
23
40

13

30

52

82

5
5
10
18
32
55

121

6
4
8
15
26
44
75

172

Total users (paying and free) retention m

1
2
3
4
5
6
7
8
9
10
Time-period cohorts

1
1,275

2
1,020
671

3
816
537
887

4
653
430
710
1,168

5
522
344
568
935
1,535

6
418
275
454
748
1,228
2,012

Time-period cohorts

11
12
13
14
15
16
17
18
19
20
21
22
23
24
paying users

1,275

1,691

2,240

2,960

3,903

5,134

User retention

Time period
10
11
2
1
3
3
6
5
10
8
18
15
31
25
52
42
87
70
145
116
240
192
316

7
3
6
12
20
35
60
102

8
3
5
9
16
28
48
81
136

9
2
4
7
13
23
39
65
109
181

12
1
2
4
7
12
20
33
56
93
153
253
416

13
1
2
3
5
9
16
27
45
74
123
202
333
545

14
1
1
2
4
7
13
21
36
59
98
162
266
436
714

239

328

443

594

792

1,049

1,384

1,821

9
214
141
233
383
629
1,030
1,685
2,753
4,492

10
171
113
186
306
503
824
1,348
2,202
3,594
5,860

11
137
90
149
245
402
659
1,078
1,762
2,875
4,688

12
110
72
119
196
322
527
863
1,409
2,300
3,750

13
88
58
95
157
257
422
690
1,128
1,840
3,000

14
70
46
76
125
206
338
552
902
1,472
2,400

) retention matrix
7
334
220
363
598
982
1,609
2,633

8
267
176
291
479
786
1,288
2,106
3,441

6,740

8,833

11,559

15,107

7,638

6,111
9,951

4,889
7,961
12,958

3,911
6,369
10,366
16,866

19,724

25,730

33,542

43,699

15
1
1
2
3
6
10
17
29
47
79
129
213
349
571
933

16
0
1
2
3
5
8
14
23
38
63
104
170
279
457
747
1,219

17
0
1
1
2
4
6
11
18
30
50
83
136
223
366
597
975
1,590

18
0
1
1
2
3
5
9
15
24
40
66
109
179
292
478
780
1,272
2,072

19
0
0
1
1
2
4
7
12
19
32
53
87
143
234
382
624
1,018
1,658
2,700

20
0
0
1
1
2
3
6
9
16
26
42
70
114
187
306
499
814
1,326
2,160
3,514

21
0
0
1
1
2
3
4
7
12
21
34
56
91
150
245
399
651
1,061
1,728
2,811
4,572

2,390

3,131

4,095

5,348

6,978

9,097

####

15
56
37
61
100
165
270
442
722
1,178
1,920

16
45
30
49
80
132
216
353
577
942
1,536

17
36
24
39
64
105
173
283
462
754
1,229

18
29
19
31
51
84
138
226
369
603
983

19
23
15
25
41
67
111
181
296
482
786

20
18
12
20
33
54
88
145
236
386
629

21
15
10
16
26
43
71
116
189
309
503

22
0
0
0
1
1
2
4
6
10
16
27
45
73
120
196
319
521
849
1,382
2,249
3,658
5,945

15,425

22
12
8
13
21
35
57
93
151
247
403

3,129
5,095
8,293
13,493
21,945

2,503
4,076
6,634
10,794
17,556
28,545

2,002
3,261
5,307
8,635
14,045
22,836
37,119

1,602
2,609
4,246
6,908
11,236
18,269
29,695
48,253

1,282
2,087
3,397
5,527
8,989
14,615
23,756
38,603
62,708

1,025
1,670
2,717
4,421
7,191
11,692
19,005
30,882
50,166
81,464

820
1,336
2,174
3,537
5,753
9,354
####
####
####
####
####

656
1,068
1,739
2,830
4,602
7,483
12,163
19,765
32,106
52,137
84,628
#####

56,905

74,069

96,374

125,353

162,990

211,855

####

#####

23
0
0
0
1
1
2
3
5
8
13
22
36
59
96
157
256
417
679
1,106
1,799
2,926
4,756
7,726

20,066

23
9
6
10
17
28
45
74
121
198
322

24
0
0
0
0
1
1
2
4
6
11
17
29
47
77
125
204
333
543
885
1,439
2,341
3,805
6,181
10,034
26,087

24
8
5
8
13
22
36
59
97
158
258

525
855
1,391
2,264
3,682
5,986
9,731
15,812
25,685
41,709
67,703
#####
#####

420
684
1,113
1,811
2,945
4,789
7,784
12,649
20,548
33,367
54,162
87,873
#####
#####

#####

#####

Revenue versus ad spend

Revenue mix
Pro
Partner
More
Rev/paying

Avg rev
%
$10.00
$15.00
$2,000.00
$50.20

Cost of service

$0.68

Time period
Paying users
Total users
Revenue
Ad spend
Cost of service
Total cost
Profit per user
Month's profit
Profit-to-date

90%
8%
2%

1
13
1275
$640
$500
$867
$1,367
$
$

(57.02) $
(726.95) $
$

2
30
1691
$1,489
$525
$1,150
$1,675
(6.27) $
(185.99) $
(912.94) $

3
52
2240
$2,614
$551
$1,523
$2,074
10.35 $
539.08 $
(373.86) $

4
82
2960
$4,100
$579
$2,013
$2,592
18.46
1,507.80
1,133.94

$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
1

rsus ad spend

5
121
3903
$6,059
$608
$2,654
$3,262
$
$
$

23.18
2,797.17
3,931.11

6
172
5134
$8,636
$638
$3,491
$4,129
$
$
$

26.20
4,506.93
8,438.03

7
239
6740
$12,020
$670
$4,583
$5,253
$
$
$

28.26
6,766.51
15,204.54

8
328
8833
$16,454
$704
$6,006
$6,710
$
$
$

29.73
9,744.01
24,948.55

9
443
11559
$22,256
$739
$7,860
$8,599
$
$
$

30.81
13,657.82
38,606.36

10
594
15107
$29,840
$776
$10,273
$11,048
$
$
$

31.61
18,791.76
57,398.13

Ad spend versus Revenue

Revenue
Total cost

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

11
792
19724
$39,741
$814
$13,412
$14,227
$
$
$

Revenue
Total cost

32.23
25,514.75
82,912.87

12
1049
25730
$52,658
$855
$17,496
$18,352
$
32.70
$ 34,306.26
$ 117,219.13

13
1384
33542
$69,496
$898
$22,808
$23,706
$
33.08
$ 45,789.51
$ 163,008.64

14
1821
43699
$91,433
$943
$29,716
$30,658
$
33.37
$ 60,774.51
$ 223,783.15

15
2390
56905
$119,999
$990
$38,695
$39,685
$
33.60
$ 80,313.85
$ 304,096.99

16
3131
74069
$157,182
$1,039
$50,367
$51,406
$
33.78
$ 105,775.26
$ 409,872.25

17
4095
96374
$205,561
$1,091
$65,534
$66,626
$
33.93
$ 138,935.58
$ 548,807.83

18
5348
125353
$268,488
$1,146
$85,240
$86,386
$
34.05
$ 182,102.62
$ 730,910.45

19
6978
162990
$350,309
$1,203
$110,833
$112,036
$
34.14
$ 238,272.88
$ 969,183.33

20
9097
211855
$456,661
$1,263
$144,062
$145,325
$
34.22
$ 311,335.59
########

21
11850
275270
$594,846
$1,327
$187,183
$188,510
$

34.29
#######
#######

22
15425
357517
$774,320
$1,393
$243,111
$244,504
$

34.35
#######
#######

23
20066
464110
$1,007,303
$1,463
$315,595
$317,057
$

34.40
#######
#######

24
26087
602123
$1,309,568
$1,536
$409,443
$410,979
$

34.45
#######
#######

Lifetime value
Paying users LTV
Time period
Paying users
User periods
Rev/paying user
Aggr LTV
LTV for paying users
New users conv %

1
13

2
10

3
8

4
7

5
5

2
1020

3
816

4
653

5
522

63
$50
$3,185
$249.81
1%

New (unregistered) users LTV

Time period
New users

1
1275

User periods
Aggr LTV

6345
$3,185

LTV for new users

$2.50

e
6
4

7
3

8
3

9
2

10
2

11
1

12
1

6
418

7
334

8
267

9
214

10
171

11
137

12
110

13
1

14
1

15
1

16
0

17
0

18
0

19
0

13
88

14
70

15
56

16
45

17
36

18
29

19
23

20
0

21
0

22
0

23
0

24
0

20
18

21
15

22
12

23
9

24
8