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Concept7 min read
LTV/CAC Ratio
The ratio of customer lifetime value to customer acquisition cost — the single most important unit economic metric in subscription businesses. The famous 3:1 rule of thumb comes from this ratio.
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What's inside
- Definition
- Why it matters
- Formula
- Units & benchmarks
- Key levers
- Where it shows up in cases
- How it's charted
- Worked example
- Common traps
- Industry nuances
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