Customer Lifetime Value:

Definition: (LTV) is how much revenue one customer generates for your business over time.

LTV Formula:

(ARPA* Gross Margin) / Revenue Churn = LTV

Customer Acquisition Cost (CAC Payback)

Customer Acquisition Cost (CAC) is how much money you spend in sales and marketing to acquire one new customer.

CAC Formula

Sum of Sales and Marketing Expenses / # of new customers acquired

CAC Payback

Customer Acquisition Cost (CAC) payback is the number of months it will take to recover the cost of acquiring a customer (your break-even point).

CAC Payback Formula

(CAC / Avg MRR * Gross Margin%)

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