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Thanks for the comment! Re Lifetime: Good point, this is value (or more precisely, revenue) to date. Re Value: The post outlines the first step in deriving "t

by auston 15y ago

Thanks for the comment! Re Lifetime: Good point, this is value (or more precisely, revenue) to date. Re Value: The post outlines the first step in deriving "true" value. The intent is to allow you to take the ltv as described & subtract the appropriate costs to find a net gain or loss. Sorry for not being as thorough as I should have, I'll try to get an amendment from Paul.

daveungerer 15y ago
Pleasure. Here's an example to help illustrate: Discounted (future) revenues: $100 Discounted (future) ongoing costs: $20 Value: $80 ($100 - $20) Acquisition cost: $60 (e.g. adwords) Net Present Value (NPV): $20 ($80 - $60) An NPV of $20 means you create $20 in value by acquiring a customer. That's what you were trying to say with "true" value / net gain or loss - but there's no such thing as "true" value - you're either working with value or you're not. Note that revenue to date did not figure into any of the above - we're concerned with the future here, so the past is only useful in as much as it helps you with forecasting. The wikipedia page on CLV is surprisingly good, have a look.