EconomicsApr 30, 20268 min read
How to Calculate Unit Economics Before You Launch
V
Validexio Team
Editorial Team
Math > Optimism
Optimism is a requirement for founders, but it's toxic when applied to unit economics. If your Customer Acquisition Cost (CAC) is higher than your Lifetime Value (LTV), your startup is doomed, no matter how good the product is.
The Basic Equation
Before you build, estimate your CAC. How will you get customers? Ads? SEO? Cold email? Figure out the cost. Then estimate your LTV. If LTV is not at least 3x your CAC, you need to rethink your pricing or your acquisition strategy.
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