If the LTV of a "good" user (e.g. user who buys things from ads) is X, you price the non-ad tier at X + Y. Y is the premium you pay for not wanting to see ads.
So you're right, but also wrong, in that you can extract EVEN MORE money from the user you were talking about through a non-ad tier.
Companies (Meta, Google, etc) get better at advertising -> LTV goes up -> non-ad tier goes up
If the LTV of a "good" user (e.g. user who buys things from ads) is X, you price the non-ad tier at X + Y. Y is the premium you pay for not wanting to see ads.
So you're right, but also wrong, in that you can extract EVEN MORE money from the user you were talking about through a non-ad tier.
Companies (Meta, Google, etc) get better at advertising -> LTV goes up -> non-ad tier goes up