Calculate CAC and LTV for unit economics.
CAC (Customer Acquisition Cost) is how much you spend to win one customer; LTV (Lifetime Value) is how much that customer is worth over their entire relationship. The LTV/CAC ratio is the core metric for sustainable growth.
An LTV/CAC ratio above 3 is generally healthy — each real spent on acquisition returns at least three in revenue. Below 1 means you are spending more to acquire a customer than they will ever pay you.
The calculation assumes a flat monthly revenue and a fixed lifetime. In practice, churn rates vary and revenue per customer may grow or shrink — use cohort data for a more accurate picture.
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