The Ultimate LTV/CAC Calculation Template 📈

Use this to maximize business growth 🚀

👋 Hey, Linas here! Welcome to a special issue of my daily newsletter. Each day I focus on 3 stories that are making a difference in the financial technology space. Coupled with things worth watching & most important money movements, it’s the only newsletter you need for all things when Finance meets Tech. If you’re reading this for the first time, it’s a brilliant opportunity to join a community of 222k+ FinTech leaders:

Understanding the balance between customer acquisition costs (CAC) and the lifetime value of a customer (LTV) is fundamental to any business’s financial well-being and crucial for sustainable growth.

Companies like Nubank and Wise have mastered this, and that’s exactly why they are some of the most successful FinTechs globally.

Don’t worry, you can master this too as today I’m excited to share a brilliant LTV/CAC Calculation Template I recently came across. It’s a vital tool designed to provide clear insights into customer profitability and marketing efficiency.

But first, a quick refresher ♻️

• CAC measures the cost involved in acquiring new customers. It is calculated as the total amount spent on acquisition efforts divided by the number of customers acquired. In other words, how much is being invested in marketing for each new customer?

• LTV reflects the projected profits from a customer throughout their relationship with your company. It’s calculated as (average revenue per customer - CAC - customer service cost) divided by (churn rate + discount rate). In other words, what is the estimated profit from each customer over time?

The ratio between the two tells you whether your current customer base is profitable or not.

This intuitive LTV/CAC template thus includes the following:

• Time series

• Marketing expenses

• number of new customers

• Average monthly revenue per customer

• Monthly average churn

• Plus, several of the derived calculations from those values.

So leverage this template to sharpen your business strategies, optimize marketing spend, and enhance customer relationships, all while steering your company towards greater financial health 👇

P.S. you will also unlock the Cashflow Forecast Template which is a game-changer for anyone navigating the challenging waters of business finance.