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Acquisition cost on its own is just a number. Set it against lifetime value and it becomes a spending limit: the most you can pay to win a customer and still come out ahead. Nothing leaves your browser.
How to read it
Gross profit still has to cover rent, salaries, software and tax. The rule of thumb is that a customer should return about three times what they cost to win, so there is something left after the business itself is paid for. Below 1:1 you are paying to lose money.
A 5:1 ratio that takes two years to arrive will still bankrupt you if you are funding the ads from cash. Under three months is comfortable, under six is workable, over twelve means growth is limited by your bank balance rather than your marketing.
If you are at 8:1 you are probably underspending. There are customers you could profitably buy and are not. That is the case for raising budget, and the budget planner works out how far.
Two places: agency fees and salaries left out of the spend, and a lifespan picked from hope rather than data. Both push the ratio up and neither shows up until the cash does not arrive.
If the cost per customer is too high, that is usually a paid advertising problem. If the lifetime value is too low, it is a retention and organic search problem.
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