What is the lifetime customer value (LCV) of each subscriber who signs up for your subscription or membership site?
The LCV can be calculated using the formula below where RR = renewal rate and P = annual membership fee.
LCV = 1/(1-RR) X P
Therefore if your renewal rate is 80% and your annual membership fee is $600, your life-time customer value is:
1/(1-0.8) X $600 = $3,000.
Meaning each new subscriber at $600 a year will stay with you on average 5 years and spend $3,000 total.
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