LTV/CAC ratio

searcher profile

April 04, 2021

by a searcher from University of California, Berkeley - Haas School of Business in Dallas, TX, USA

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
1
64
Replies
1
commentor profile
Reply by a searcher
from Drexel University in Philadelphia, PA, USA
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.
Join the discussion