Question 1

What is a good LTV:CAC ratio?

Accepted Answer

A healthy LTV:CAC ratio is 3× or higher. This means each customer generates at least three times the cost of acquiring them. Below 1× means you lose money on every customer. Between 1× and 3× is marginal — enough to survive but not enough to fund growth. Above 5× is exceptional and makes fundraising conversations significantly easier.

Question 2

How do I calculate customer lifetime value (LTV)?

Accepted Answer

LTV = (Average Revenue Per User × Gross Margin) ÷ Monthly Churn Rate. For example, if your ARPU is €100/month, gross margin is 70%, and monthly churn is 3%, your LTV = (100 × 0.70) ÷ 0.03 = €2,333.

Question 3

What is CAC payback period?

Accepted Answer

CAC payback period is the number of months it takes to recoup the cost of acquiring a customer. It is calculated as CAC ÷ (ARPU × Gross Margin). A payback period under 12 months is considered strong; under 18 months is acceptable at pre-seed stage; over 24 months is a red flag for investors.

Question 4

How do I calculate customer acquisition cost (CAC)?

Accepted Answer

CAC = Total Sales & Marketing Spend ÷ Number of New Customers Acquired in the same period. Include all costs: ad spend, sales team salaries, tools, content production. Blended CAC (all channels combined) is what investors ask about; per-channel CAC is what you use to optimize.

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