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Common Questions
Frequently Asked Questions
How is subscription LTV different from one-time-purchase LTV?
Subscription LTV is a function of MRR, churn, and margin. The formula simplifies to: (MRR × margin %) ÷ monthly churn rate. The lower the churn, the longer customers stay, and the higher the LTV grows - non-linearly. Halving churn doubles LTV. One-time LTV depends on purchase frequency and AOV, which are usually flatter levers.
What is a good monthly churn rate for subscription ecommerce?
Consumables and refill products typically run 5-8% monthly churn. Beauty and skincare 6-10%. Boxes and curated products 8-12%. Anything under 5% is excellent; anything over 12% means customers are not seeing enough value to stay past their second or third box.
Should I prioritize prepaid plans or monthly plans?
Prepaid plans front-load cash, which compresses CAC payback dramatically and shifts the cash cycle in your favor. The trade-off is the prepay discount eats into LTV. The rule of thumb: if you're ad-spend-constrained or have negative cash flow, push prepaid. If you have plenty of cash but slow growth, focus on retention to extend monthly LTV.
Why does my LTV:CAC look healthy but cash flow is tight?
LTV:CAC is a long-term unit-economics measure, but it doesn't tell you when the cash arrives. A 4:1 LTV:CAC with 6% churn means you recover CAC over 16+ months. If you're acquiring 1000 new subscribers per month with $65 CAC, you're spending $65K monthly and recovering that money slowly over 16+ months. The faster you scale, the deeper the cash hole.
How does churn vary by cohort?
Most subscription brands see "first-90-days churn" 2-3x higher than steady-state. Customers who survive their third box typically have 30-50% lower monthly churn afterward. This means cohort-level LTV is much higher for retained customers than the blended average suggests.
Should I include shipping costs in subscription margin?
Yes. Subscription brands often forget that shipping recurs every cycle and erodes margin. A $35 MRR box with $6 shipping costs is really a $29 effective MRR. Include shipping in COGS when calculating gross margin, otherwise your LTV will look inflated by 15-20%.