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) 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
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%)
