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I'm working on a project for a subscription app that only has a 1-year option, and we are buying against the 1-year LTV. The logic behind this is pretty straightforward:
In general, I think this is a great question, and teams don't spend enough time thinking about it. An imprudent decision I see companies make is extending out their payback window for long-term subscriptions after raising a huge round of financing because they need to hit aggressive growth targets. A better way to manage that necessity, in my opinion, is to expand the product catalogue and create new opportunities to monetize that can drive top-line growth in ways that aren't tied to a one year cadence. Marked as spam
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Working on a mobile product with a subscription-based model. For our 6m auto-renewable subscription, we're taking only 1 renewal after the first payment. So, LTV is calculated for 6m + 1 day. For shorter subscriptions, LTV is calculated for 6m. Anything earned beyond that period will be an additional plus. Pretty conservative approach I would say, but allows us to be on the safer side and more rigorously control our CAC, improve LTV and ensure LTV > CAC. Worth to mention that it really depends on your business targets and limitations, product peculiarities and the niche you're working in. Marked as spam
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