The True CAC Framework
Your LTV:CAC says 3:1. Your bank account disagrees. Here’s the math that actually predicts profitability.
The Problem
Most UA teams calculate LTV wrong, measure CAC incompletely, and compare mismatched timeframes. The result: decisions based on fantasy math.
The Three LTV Lies
1. The Projection Lie
Using 12-month modeled LTV for users active 6 weeks. You’re betting budget on predictions, not reality.
2. The Blended Lie
Averaging LTV across all channels. Your “2.5:1 ratio” hides that organic is 8:1 and paid is 1.2:1. You’re subsidizing losers with winners.
3. The Timeframe Lie
Comparing 12-month projected LTV to 30-day CAC. Makes every campaign look profitable until cash runs out at month 6.
The Framework
Most teams calculate: Ad Spend ÷ Installs = CAC. True CAC is typically 20-40% higher.
Formula
True CAC = (Media + Creative + Tools + Team Allocation) ÷ Installs
The Blended Metrics Trap
Blended metrics mask channel-level disasters. What the dashboard shows as a healthy 2.8:1 LTV:CAC might hide:
The “healthy” blended ratio is hiding two unprofitable channels eating 40% of budget. Split everything by channel AND platform. Every channel should justify itself independently.
What Actually Matters
- •D7 retention predicts trial conversion
- •D30 retention predicts subscription LTV
- •90-day cohort revenue beats 12-month projections
- •Channel-specific analysis reveals what blended hides
The Tools
True CAC Calculator
Input your real costs across all categories and see your actual customer acquisition cost — not the flattering version.
Retention Payback Calculator
Model retention curves and calculate real payback periods instead of relying on LTV projections.
Related Issues
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