Use unit economics as a medium- to long-term KPI

[shaownhasan]

Calculation method Calculation method for repeat products LTV = Purchase price x Number of purchases x Duration This is the most basic method of calculating LTV, and is the formula used when you want to calculate LTV for repeat products. With this formula, for example, if a customer purchases a 1,000 yen item three times a year for three consecutive years, the LTV would be 27,000 yen. Basically, LTV is calculated from the overall average value, but in some cases, you can calculate it by dividing the period into periods to find periods when it is effective or ineffective.


Calculation method for BtoB products LTV = Annual transaction denmark telegram data amount per customer x Profitability x Number of years per customer For B2B products, it is effective to calculate LTV using a formula based on this profitability rate. Just because the transaction amount with one customer is large, or the order amount is simply large, does not necessarily mean that the transaction is good. Using this formula, if a customer purchases a product with a profitability rate of 50% for 1 million yen per year for two consecutive years, the LTV will be 1 million yen.


If a customer purchases a product with a profitability rate of 70% for 800,000 yen per year for two consecutive years, the LTV will be 1,120,000 yen. In this case, the former is larger in terms of simple transaction amount, but in terms of profit to the company, the latter is superior. Formula for subscription-based products LTV = average customer price x gross profit / cancellation rate For subscription-based products and services, the profits of a company depend directly on how long customers can continue to use the product or service.