How to Calculate LTV for a Mobile Game (Formula, Steps and Pitfalls)

What is LTV in a mobile game?

Lifetime value is the revenue (or margin) a user is expected to generate over their life in the game. It links acquisition to monetization: a user is worth buying if expected LTV comfortably exceeds the cost of acquiring them, on a timeline your cash can support.

What is the formula?

For a cohort, LTV at day N is cumulative revenue by day N divided by installs. For a forecast, it is the sum over days of the share of users still active on that day multiplied by revenue per active user on that day:

LTV(N) ≈ Σ (t = 0…N) Retention(t) × ARPDAU(t)

If ARPDAU is roughly flat, that simplifies to ARPDAU × expected active days per user.

How do you calculate it step by step?

Measure retention at D1, D7, D30 (and later where you have it) for matured cohorts.
Fit a curve. Mobile retention decays roughly as a power law, R(t) = a × t^(−b). Fitting through your observed points lets you estimate the days you have not seen. The LTV Simulator and DAU Forecaster both do this.
Sum expected active days to your horizon.
Multiply by revenue per active day — including ad revenue if your game earns it, and consistent about gross vs net of store fees.
Check against reality. Compare the model’s D30 and D60 predictions with cohorts that have reached those ages, and adjust.

Where does LTV go wrong?

The tail. Projections beyond your observed data are assumptions. A small change in the decay exponent swings D365 LTV by a lot.
Blended cohorts. Country, platform and source mix change LTV more than most product changes. Model the segment you are about to buy — see The Averages Trap.
Missing ad revenue. In ad-supported games, leaving it out undervalues exactly the users UA should buy.
Immature data. Early revenue is often revised, especially ad revenue and iOS attribution.
ARPDAU drift. Revenue per active user typically rises as surviving users are more engaged; a flat assumption can understate late value.

How should LTV be used?

As an input to payback and bid decisions, with an explicit horizon and confidence. Set bids from the part of LTV you can recover within your acceptable payback window, and revisit as cohorts mature. The Payback Grader and Bid Runway tools turn an LTV curve into a bid cap and a cash requirement.