5 Ways to calculate lifetime value for free-to-play games

Vasiliy Sabirov from devtodev shares with us an insightful article where you’ll learn the best way to calculate the lifetime value for your game or app. The question of calculating lifetime value (LTV), also known as customer lifetime value (CLV), sooner or later pops up before the developers of mobile games and apps. There are many valid methods to calculate LTV. In this article, we will describe the 5 most common methods and will identify their strengths and weaknesses. These methods are especially suitable for the free-to-play model. We’ll start with the most simple (and rough) way to calculate lifetime value for free-to-play games. Don’t worry, following methods will get more and more accurate to predict the LTV of your apps.   Lifetime value for free-to-play games: transitioning from quick to accurate Method #1: Post Factum This method stands out from all the ones that will follow because it does not model LTV, meaning it doesn’t predict LTV, but considers actual LTV. For this method, it is necessary to take a cohort of people who have already left the game or app, to see how much money the whole cohort brought in and then divide that amount by the size of the cohort. It is desirable that users were registered during the same period of time. For example during the same month, or better still, the same day. In practice, this method is poorly applicable because there is always at least one person in the cohort who is still active, no matter how long the cohort was registered. And this is why in practice the LTV is modeled and not calculated as the...