MBA Takeaways
Operator Handbook — concise, practical, real-world
Start Here Topics Study Order Playbooks
Finance

LTV vs CAC

TL;DR: Customer value must clearly exceed customer acquisition cost.

Study Order Finance #6 LTV vs CAC
Why it matters

This is the core sanity check for many subscription, marketplace, and SaaS businesses.

How to use it
  • Estimate realistic lifetime, not fantasy retention.
  • Use gross margin-adjusted LTV.
  • Track payback, not just the ratio.
Real-life example

If you spend $300 to win a customer worth $280 gross profit, you bought growth that destroys value.

Where people screw it up

Using inflated lifetime assumptions and calling the math “healthy.”

Bottom line

Customer value must clearly exceed customer acquisition cost.

Study position

#6 in the sequence

You are here because this concept becomes more useful after Contribution Margin and before Customer Truth.

What to study next

Customer Truth

Best use: read this page in 2–3 minutes, then apply it to one company, one product, or one decision you actually care about.

Built for fast reading, better decisions, and real-world use — not academic page count.