Should LTV use revenue or gross profit?

Gross-profit LTV is generally more useful for acquisition planning because it reflects value retained after direct costs.

Why can a strong ratio still be risky?

Long payback consumes cash before value is recovered. Review ratio, payback, churn, and cash runway together.

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Estimate acquisition economics by comparing CAC with gross-margin lifetime value and the months needed to recover acquisition cost.

Last updated 6 August 2026

Monthly revenue per customer

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Gross margin

Monthly customer churn

Customer acquisition cost

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LTV = Monthly revenue × Gross margin ÷ Monthly churn · Payback = CAC ÷ Monthly gross profit

Use cohort-level revenue and churn where possible.

Gross-margin LTV reflects the value available to recover CAC and overhead.

Review payback with cash runway and retention risk.

At ₹2,500 monthly revenue, 65% margin, 5% churn, and ₹3,000 CAC, estimated LTV is ₹32,500, the ratio is 10.83×, and payback is 1.85 months.

The simple churn model does not model seasonality, expansion revenue, or changing retention curves.

Connect media planning to cohort quality, payback, margin, and cash efficiency.

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