In today’s tech-saturated market, the term “growth hacking” has become a buzzword that is often thrown around, but what exactly does it mean and why is it significant, particularly for Software […]
🕑 Reading Time: 16 MinutesA great way to understand any business model is to answer the following simple question:
Can I make more profit from my customers than it costs me to acquire them?
This is effectively a study of the unit economics of each customer. To answer the question, we need two metrics:
(How to calculate LTV and CAC)
Entrepreneurs are usually overoptimistic about how much it costs to acquire a customer. This probably comes from a belief that customers will be so excited about what they have built, that they will beat a path to their doors to buy the product. The reality is often very different!