What is the difference?
CAC Payback Period vs LTV:CAC Ratio
CAC Payback Period
Lifetime Value to Cost of Acquisition Ratio
What is it?
CAC Payback Period is the time it takes for a company to earn back their customer acquisition costs. The value depends on how high the Customer Acquisition Cost (CAC) is and how much a customer contributes in revenue each month or each year.
The Lifetime Value to Cost of Acquisition (LTV/CAC) Ratio tells you if the theoretical lifetime revenue you get from a customer is higher or lower than the sales and marketing costs needed to acquire that customer.
Who is it for?
Categories
Formula
ƒ Sum(Sales & Marketing Expenses in Period) / (Sum(Net New MRR Acquired in Period) X Gross Margin %)
ƒ Average(CAC per customer) / (Average(MRR per customer) X Gross Margin %)
ƒ (Customer Lifetime Value) / (Customer Acquisition Cost)
ƒ ((ARPA x Gross Margin) / Churn Rate ) / Customer Acquisition Cost
Published and updated dates
Date created: Oct 12, 2022
Latest update: Mar 18, 2024
Date created: Oct 12, 2022
Latest update: Mar 21, 2024