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Comments
You don't. All you can know is whether or not you're scoring in a range you're happy with.
I've found myself philosophically asking myself the same question. I agree with @10000019, but would also like to add that this is a question, to me, of that which you can conceive. By that I mean that you need to ask yourself if you can conceive of, or imagine yourself scoring higher?
If so, then you probably have not reached your potential.
For me, the potential I conceive of has changed as I've improved. Once I went -0 at least once on each section, I knew that my potential was now a 180. That is my potential and my ultimate goal. I then had to plot this notion somewhere in reality and my expectations. I then decided that even if I'm capable of more points past a certain threshold, it wouldn't be worth it for me personally to retake. So here I am, my goal is a 180 and I figure I'll be more than happy with anything in the 170+ range.
When you hit 180. Seriously. It might be hard to get you score up there, but with enough teaching, practice, and understanding, anyone can get there score to that mark. The real question is how long will that take someone and how much time are they willing to invest in this.
I think you're asking the wrong questions.
You will never really hit your potential. There will always be room for some sort of improvement. Even with an occasional score of 180 people can still improve.
What I think you really want to ask is; when does studying and putting the test off become more of a burden than achieving a higher score?
This answer is different for every single person. Some people have a target score that they are perfectly happy with once they achieve it.
Some people have a target school, and a score range that they need to achieve in order to get accepted to that school.
Some people take the test as a personal challenge and will never be done with it.
Some people can't afford to take years out of their lives to study and have to accept the best they can do after X amount of time.
You're potential is truely unlimited. The question you need to ask yourself is; when does it start to become a diminishing return in your life.
I agree with the above posters. Almost everyone probably can hit an average close to a 180 given enough practice. That said I would not recommend that everyone's prep strategy should be to just study as many months or years as it takes to get them to 180.
I think the best way to make a decision about how to progress with your studying is marginal analysis. If studying one additional hour is likely to give you more utility or long term satisfaction(measured in future earnings, employment opportunities, happiness with your score or school, ect.) than the next most valuable thing you could be doing with your time (anything from working, to engaging is some hobby, to sleeping, to dating, to curling up with a book, getting a year of law school out of the way with your current score, ect) then keep adding on additional hours, months, or years of studying. When the two utilities are equal you are studying the optimal quantity. If you get more utility out of the best alternative use of your time, do more of that and less LSAT studying.
My Marginal Analysis
For me, despite scoring a 172 after 3 weeks of studying in February it is worth studying for 3 months in the summer to try to break 175.
This is because my next best alternatives were not very good. I failed to secure a good internship for the summer. I have a part time tutoring job which I work more on during the school year that I therefore can't quit. This prevents me from traveling the country for the summer or something like that. Therefore my next best alternative is probably to work on the novel I am trying to write. The novel is probably a break even financial proposition in the long run. However, it will give me some personal satisfaction to finish it sometime in my life. If that is during retirement it's all right with me.
The other reason I have continued to study is that the utility I expect to get from a potential higher score seems rather high. A sufficiently high score gives me a reasonable shot at Harvard which would open up a lot of opportunities and provide an excellent LRAP. My GPA is near Harvard's 25th so I want a LSAT above their 75th. Alternatively, it could get me a full scholarship to a top 14 attempting to tempt me away from Harvard. Since, I want to do public interest work I will, barring the LRAP at one of the very tip top schools probably go to the best school of those I am interested in in my region that gives me a full tuition scholarship in order to minimize my debt.
If you intend to go into big law, have a high paying current job, are from a wealthy family paying for school, ect the scholarship consideration melts away somewhat and you might choose to attend a school like Northwestern or Columbia at full freight which gives you a good sized chance at big law. If this were the case you might stop studying with my172 unless you place personal value on the prestige of Harvard or the prestige of jobs you can get out of Harvard.
End of My Marginal Analysis
So use marginal analysis. Study if you have nothing better to do than study. This could either be because your alternative time uses are not valuable or because for you, studying is very valuable.
The one thing that I would probably try to discount is whether you enjoy studying the LSAT. I am starting to, but shouldn't study instead of pursuing other ends just because it is comfortable and safe. If you hate it, that probably will also be outweighed by debt or employment opportunities in the future.
I've also found that thinking about "ultimate potential" has mostly lead me to frustration. Yes, I have a goal, but I've found that my mental health has been a lot better when I focus on the more immediate things (like pacing and consistency with certain types of questions and sections.) For me, it's all about tuning up individual sections and question types, and perfecting the smaller things one at a time just feels like a more attainable goal than a perfect score at this point.