Estimate Uber Customer LTV From Trip Frequency, Take Rate and Retention

Estimate the lifetime value (LTV) of an Uber user. Define what you are measuring, set up a formula, state each assumption with round numbers, and work through the arithmetic to a figure you can defend. ```hint Separate how often, how much and how long Split the estimate into how often a user takes trips, how much of each trip Uber actually keeps, and how long the user keeps riding. Then ask whether those three inputs move together across different kinds of users. ``` ### Clarifying Questions - Does "user" mean a rider, a driver or a food delivery customer, and which Uber services should count? - Should LTV be measured as the fares a user pays, Uber's revenue after paying drivers, or profit after variable costs? - Which market should the estimate cover, given how much fares and riding habits differ between countries? - Is the answer for an average current user or for a newly acquired one, and should future value be discounted? ### What a Strong Answer Covers - An agreed definition of LTV: whose value, which services, and revenue versus profit. - A formula that separates trip frequency, value kept per trip and expected lifetime, with churn and discounting. - Labeled, round-number assumptions, segmented by type of user, with arithmetic that is easy to follow and correct. - A sanity check against outside reference points and a view of which inputs the answer is most sensitive to. - How the estimate would inform a decision, such as how much to spend acquiring or retaining users. ### Follow-up Questions - How would the estimate change if the user also orders food through Uber or joins a paid membership? - With access to Uber's real data, how would you measure LTV instead of assuming the inputs? - What would you recommend if new-user LTV turned out to be lower than the cost of acquiring a new user?