Finding customers and growing
CAC and LTV
CAC, short for customer acquisition cost, is what you spend to win one customer, and LTV, short for lifetime value, is what that customer pays you while they stay.
Also called customer acquisition cost, customer lifetime value, lifetime value, CAC, LTV
CAC counts ads, tools and paid help. LTV is built from how long customers stay, so it is only as good as your churn number, the share of customers who cancel each month. If a customer costs more to win than they bring in, faster growth only loses more money.
When this shows up
Example, not a real founder: you run ads and win customers at what feels like a fair cost. Most of them cancel soon after. When you compare what each one paid with what it cost to win them, every new customer lost money.
What to do next
Add up last month's spend on winning customers and divide it by the new customers you got. Put that next to what an average customer has paid you so far.
Go deeper
How much should you charge for your app? A number with reasons
A suggested price, how sure it is, where your pricing leaks money and one test, or a note when it cannot price honestly.
Read the guideOr go straight to the tool