Why is lifetime value in Revenue decreasing over time?

While it is true that lifetime value for any individual user can only go up, the lifetime value line chart in Revenue* looks at the average lifetime value across all current paying users. It is possible for a newer user to bring up the average in earlier time units, but not yet affect later days/weeks/months, resulting in a lifetime value chart that goes down over time.

What is lifetime value per user?

The lifetime value metric in Mixpanel People - Revenue is calculated with the people function people.track_charge(). This allows you to create a people property that tracks how much money your customers are spending with you. In turn, Mixpanel is able to calculate the Lifetime Value for the user by accumulating that amount.

What is lifetime value across users?

The lifetime value line chart essentially answers this question: what's the average value of all paying users at x days/weeks/months after he/she first became a paying user?

alt text

So if your project has some high-paying users who are still relatively new as paying users (meaning they haven’t yet reached later months of paid usership yet), they bump up the averages for earlier months but not yet later months, hence the decrease.

For example

Let's say we start out with just one customer in our entire project. Andy spends $1,000 in January and an additional $1,000 in February. Right now, the lifetime values should read:

1st Month: $1,000

2nd Month: $2,000

In March, Ben joins and becomes the second paying customer of the site. He spends $4,000 in March. If we check out the chart and it's still currently March, then here's what we will see:

1st Month: $2,500 [($1,000+4,000)/2 people]

2nd Month: $2,000 [($2,000+0)/1 person]

Because we're still in Ben's first month as a paying user, we'll see that his spending has brought the 1st Month count up, but since he hasn't yet gone into his second month of being a paid customer, he hasn't had any affect on the value of 2nd Month just yet.

*Limited by plan type

The Mixpanel Revenue report is available for customers on a Startup, Business, or Enterprise plan - visit the pricing page for more information or to upgrade.