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Startup Funding Espresso – The Value of LTV:CAC
The Value of LTV:CAC Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. The Lifetime Value to Cost of Customer Acquisition ratio is called LTV:CAC and is a useful ratio in determining the health of a startup. To calculate the Lifetime value, take the monthly revenue and divide by the churn rate. To calculate the Cost of Customer Acquisition, take the number of new customers for a month and divide by the cost of sales and marketing for that month. Compare the LTV to CAC to determine the ratio. The ratio must be at least 3:1 to…
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