LTV/CAC ratio

by a searcher from University of California, Berkeley - Haas School of Business

3 years ago

I’m working on a LTV/CAC ratio and ran into a question. When determining your Customer Lifetime Value, do you take into account fees charged for installation? Example: total sales/marketing spend: 1m then minus 200k install  fees collected = 800k in net sales marketing spend. Or is it best to run both a standard version and one adjusted for offsetting install fees. 

0 likes
59 views
1 comment

searcher from Drexel University - Bennett S. LeBow College of Business

I would exclude the install since those are not recurring revenue....i usually base my CLTV on recurring rev vs a mix of recurring and non recurring, but I don't know what you are analyzing CLTV for ( a plumbing biz, a landscaping company or a Micro SaaS App). If you cannot within reason forecast the future value of the account fees charged for installs I would probably exclude. Use whatever supports your other assumptions.

3 years ago | like reply | 0 likes

More on Searchfunder

Just Closed on My First Deal! Reflections and Takeaways for other Searchers

45,152 transactions are available on Searchfunder (now searchable by keyword)

Now everyone has unlimited IBISWorld access

Family office looking for traditional searchers

Examples of self-funded searcher websites

Investor seeking Self-Funded Search Deals

What are market terms for Seller Notes?

2 Best Ways To Find Motivated Sellers, Off-Market Deals

Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.

We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.