Glossary
LTV:CAC ratio
What a customer is worth over their lifetime, divided by what it cost to acquire them.
If a customer generates $600 of profit over their lifetime and cost $200 in advertising to acquire, the ratio is 3:1 - the usual rule of thumb for a healthy business. Below 1:1 you lose money on every sale and growth accelerates your bankruptcy.
Most failed e-commerce and app businesses die here. They scale advertising before the ratio works, on the assumption that volume will fix economics that were broken at every volume.
Where this matters
E-commerce Brand
Online Business
Own the product, the customer and the list — not just the storefront
- Capital
- $500 – $10k
- First income
- Months
- Risk
- Ceiling
- Seven figures
Dropshipping
Online Business
Sell products online without ever holding inventory
- Capital
- Under $500
- First income
- Weeks
- Risk
- Ceiling
- Seven figures