You fancy a lifetime value calculation, eh?
We think it’s important, but not as crucial as all these big blogs are telling you. Especially for a small bootstrapped SaaS app like us or you.
See the thing is, Lifetime Value is great and all but it’s a metric you shouldn’t really be looking at until your have some decent revenue coming in.
Chances are, if you have 50 paying customers and let’s say a price point of $24 a month then you are only bringing $1,200 a month in gross revenue.
So in this example, you’re not ready to begin advertising your application through paid ads and thus the Lifetime Value Calculation becomes less important.
Why is this?
Because LVC is an important metric to measure against your ad spend typically. It doesn’t make any sense for a SaaS company to spend $987 on acquiring a new customer if the lifetime value (the most revenue you’ll ever get from a customer, ever)is only $453.