Can you afford your CAC? Model payback against real repeat behaviour.
Growth that costs more than customers return is expensive churn. Model acquisition cost against contribution-based lifetime value — with retention honest enough to survive a CFO.
LTV = first-order contribution + repeat contribution discounted by retention each period, over your chosen horizon, at a 12% annual discount rate.
LTV:CAC below 3× is the conventional caution zone; payback beyond 12 months strains cash even at good ratios.
Retention from fewer than two cohorts of history is a hypothesis — the tool labels it, and the right move is measuring actual cohort curves (see the retention analyzer).
Illustrative figures, not a client outcome.
Because revenue ignores what the order costs to fulfil. Revenue-LTV flatters the business by exactly the variable-cost share — usually 60–80%.
Then the LTV is a guess dressed as math. Run the model with pessimistic, base and optimistic retention and fund acquisition at the pessimistic level until cohorts prove otherwise.
Version 1.0 · Reviewed 2026-10 · Methodology is fixed and version-controlled; results depend on your inputs.
CAC rising and payback stretching? Get the economics rebuilt.
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