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Metrics & Analytics

Cohort Revenue

What one signup cohort is really worth as retention decays month over month.

Your numbers

users
$
%
mo

Results

Users still active in the final month
265.72 users
Cohort × retention compounded — what's left after the decay
Revenue in the final month
$8,857.35
What the cohort pays in month N, after N−1 months of decay
Cumulative cohort revenue
$70,283.85
Total revenue the cohort generates over the tracked period (geometric sum of the decaying months)
Naive projection (no decay)
$90,000
Users × ARPU × months as if nobody churned — compare and wince

How it works

Month-N revenue = cohort × ARPU × retention^(N−1). Cumulative revenue = the sum of every month's decayed revenue.

A cohort is a group of users who signed up in the same period, tracked together over time. Cohort thinking beats blended metrics because it separates the question "are we acquiring more?" from "are the ones we acquired sticking?" — a growing top line can hide cohorts that evaporate in three months.

The classic mistake is projecting revenue as users × ARPU × months with no decay. At 90% monthly retention, a cohort's month-6 revenue is already down ~41% from month 1; the flat projection overstates the half-year total by a wide margin.

Worked example

500 users sign up, pay $30/month, and retain at 90% month over month. Over 6 months the cohort generates $15,000 + $13,500 + $12,150 + … ≈ $70,284 in total, with only ~266 users and $8,857 of revenue left in month 6. The no-decay projection claims $90,000 — a 28% overstatement in half a year.