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mysterious guy • 3m
CAC vs LTV – The Unit Economics Every Founder Must Know You’re getting users. You’re spending on ads. But is your startup actually making money per customer? If your CAC is higher than your LTV, you’re not building a business — you’re burning cash. Breakdown: 1️⃣ CAC (Customer Acquisition Cost) = How much you spend to acquire one customer. Includes: ads, sales team costs, tools, etc. 2️⃣ LTV (Lifetime Value) = How much revenue a customer brings over their entire relationship with your product. 3️⃣ The Golden Rule: 𝗟𝗧𝗩 / 𝗖𝗔𝗖 𝘀𝗵𝗼𝘂𝗹𝗱 𝗯𝗲 > 𝟯. If it’s not, you’re paying too much or not retaining well. Example: CAC = ₹1,000 LTV = ₹2,000 → ❌ (Unsustainable) LTV = ₹4,000 → ✅ (Healthy growth) Why this matters: You can grow fast and still fail if you don’t get this ratio right. Growth without margin = doom in disguise. Quick Tip: Don’t just track CAC once. Ad costs change. Behaviors change. Monitor it monthly. 𝗟𝗧𝗩 𝘁𝗲𝗹𝗹𝘀 𝘆𝗼𝘂 𝘃𝗮𝗹𝘂𝗲. 𝗖𝗔𝗖 𝘁𝗲𝗹𝗹𝘀 𝘆𝗼𝘂 𝗰𝗼𝘀𝘁. 𝗠𝗮𝗿𝗴𝗶𝗻 𝗶𝘀 𝗺𝗲𝗮𝘀𝘂𝗿𝗲𝗱 𝗶𝗻 𝘁𝗵𝗲 𝗴𝗮𝗽.
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