What is the difference?
LTV:CAC Ratio vs Magic Number
Lifetime Value to Cost of Acquisition Ratio
SaaS Magic Number
What is it?
The Lifetime Value to Cost of Acquisition (LTV/CAC) Ratio tells you if the theoretical lifetime revenue you get from a customer is higher or lower than the sales and marketing costs needed to acquire that customer.
The SaaS Magic Number is a ratio showing yearly recurring revenue growth gained for every sales and marketing dollar spent. It indicates the level of operational efficiency of a company, as well as the sustainability of sales and marketing expenditure.
Who is it for?
Categories
Formula
ƒ (Customer Lifetime Value) / (Customer Acquisition Cost)
ƒ ((ARPA x Gross Margin) / Churn Rate ) / Customer Acquisition Cost
ƒ ((current quarter’s recurring revenue – previous quarter’s recurring revenue) x 4) / (previous quarter’s sales and marketing spend)
Published and updated dates
Date created: Oct 12, 2022
Latest update: Mar 21, 2024
Date created: Oct 12, 2022
Latest update: Mar 28, 2024