This is primarily a growth model/strategy not an accounting method, and these metrics have been very common in startupland for quite a few years.
Customer acquisition cost (CAC) is paired with lifetime value (LTV). The length of time you're on "loan" to the company doesn't really matter as long as LTV is higher than CAC.
This model is commonly used for subscription businesses, where assuming each purchase is independent is not really appropriate because they are recurring.
Customer acquisition cost (CAC) is paired with lifetime value (LTV). The length of time you're on "loan" to the company doesn't really matter as long as LTV is higher than CAC.
This model is commonly used for subscription businesses, where assuming each purchase is independent is not really appropriate because they are recurring.