
Saved by Jordan Bester
How To (Actually) Calculate CAC at andrewchen
Saved by Jordan Bester
Roughly how much will it cost to acquire customers through this channel?
How much does it cost to acquire each customer through this channel strategy? How many customers are available through this channel strategy? Are the customers you are getting through this channel the ones you want right now?
The two knobs on this machine are customer lifetime value (CLV) and customer acquisition cost (CAC).
Estimate the required minimum customer acquisition rate It would be great if all we had to do was work really hard for the first three years, hit our ARR goal, and then collect an annuity for life. We could retire on a beach! But unfortunately, it doesn’t work out that way because of customer attrition, or churn.
Leveraging network effects for customer acquisition is the norm for the more successful products on the planet.
The first metric is cost per acquisition, or CPA. How much money does it cost you on average to get a new customer? If I’m running Facebook ads to sell a copy of my book, how much money does it cost to sell that book? If I’m spending $20 in ads to sell a book, my CPA is $20.