ModeldrillCAC payback and lifetime value
A financial modeling exercise from Modeldrill. Solve it with a live spreadsheet grid in your browser, with Fill right and Fill down, and it is checked the moment you submit.
The task
For each acquisition channel, fill the cost to acquire a customer (column G), the months of gross profit needed to earn it back (column H), the lifetime value as monthly gross profit divided by churn (column I) and the ratio of lifetime value to acquisition cost (column J).
What this exercise teaches
A channel can look cheap per customer and still be weak if those customers churn fast. Lifetime value over acquisition cost puts both sides on one scale.
A hint if you get stuck
Monthly gross profit per customer is revenue x margin. Payback divides the acquisition cost by it; lifetime value divides it by churn.
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