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Our customer lifetime value calculator works in two modes: simple and advanced. Let's begin by analyzing the parameters in simple mode.
ARPA: Average Revenue per Account, also called the Average Revenue per User. It is the measure of money you make on every single subscription account per month.
Gross margin: this percentage represents the portion of each dollar of revenue that your company retains as profit. For example, if your gross margin is 20%, it means that you retain $0.20 from every dollar of revenue. This value is calculated according to the formula: gross margin = (revenue - costs)/revenue. It is set to 100% by default - which would mean that there are no costs per account on your side.
Churn: it is the percentage of users that stop using your service (cancel the subscription) each month. For example, if during the last month you lost 3 out of your initial 100 subscriptions, your churn rate is 3%.
LTV: the lifetime value of one customer account - this is the average net profit you will make from one customer account for the entire time they are doing business with you. This value will be calculated automatically.