Player lifetime value and payback
Acquisition is the largest cost of most online gambling businesses. This calculator estimates what a new player is worth over their lifetime and how many months it takes to earn back what they cost to acquire.
The formulas
- Monthly contribution = net revenue per player × contribution margin.
- Lifetime value = monthly contribution ÷ monthly churn, the sum of a geometric series.
- The payback month is the first month in which the cumulative contribution of a player who may leave at any time reaches the acquisition cost.
Worked example
At 50 a month with a contribution margin of 60%, a player contributes 30 a month. With 12% of players leaving each month, the lifetime value is 250, or 1.39 times an acquisition cost of 180, and the cost is earned back in month 10.
Related: CPA vs revenue share, affiliate marketing and the glossary.
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