CAC stands for Customer Acquisition Cost, which is the cost a business incurs to acquire a new customer. This includes the cost of marketing and sales efforts. LTV, on the other hand, stands for Lifetime Value of a customer. This is the total revenue a business can reasonably expect from a single customer account. It considers a customer's revenue value and compares that number to the company's predicted customer lifespan. Businesses use these two metrics, CAC and LTV, to understand if they are spending the right amount to acquire new customers and whether they can expect to recover that cost over time.
Need to evaluate the best pricing strategy for a product? This Pricing Strategy spreadsheet includes...
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