Founder Views

I’m sure everyone knows about the classic 3:1 LTV CAC ratio that all SaaS folks should strive for. Just a reminder, LTV is the lifetime value of a client (the amount of money a client will pay you in their lifetime). CAC is the customer acquisition cost (the amount of money you spend to acquire a new customer). You can read more about these SaaS metrics and more, here. Let’s use a very simple example to put this ratio into perspective. Take the data below: —– Current LTV: $1000, New customers in the month = 50 Monthly Expenses: Sales & Marketing = $16,650, Support Costs = $6,000, Hosting = $3000, Other Personnel = $3000, Rent = $2000, Supplies = $1000, Total Expenses = $31,650 —– With this data, your CAC is $333 ($16,650 / 50 = $333). This would give you an approximate LTV CAC ratio of 3:1 ($1000:$333 = 3:1). From my experience in SaaS, sales and marketing expenses, which are used to calculate CAC, account for about 20-30% of total operating expenses. If you take into account all other necessary operating