What is LTV to CAC?
Lifetime value to customer acquisition cost: the gross profit a customer brings over the time they stay, divided by the cost to win that customer. A common rule of thumb is about 3 to 1, and AI companies must count that profit after model costs.
$9,000 earned ÷ $3,000 to win = 3 to 1
LTV to CAC divides…
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In real work
Mateo's memo put LTV to CAC at 3 to 1: each clinic brings $9,000 in gross profit over three years and costs $3,000 to win.
In the illustration
Three $1,000 coins sit in the cost-to-win tube: $3,000 to land one customer. The stay wheel turns through 36 months and drops a $1,000 gross-profit coin every four, until nine fill the second tube and the ratio pointer settles on 3 to 1.
Calculate LTV to CAC in your deal notebook from the figures below: price, gross margin after model costs, months a customer stays and cost to win one. Show the arithmetic and name the weakest assumption.
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