Include all expenses related to marketing and advertising efforts:

• Paid advertising (Google Ads, Facebook, LinkedIn, etc.)
• Content creation and marketing
• SEO and SEM expenses
• Marketing software and tools
• Marketing team salaries (portion allocated to acquisition)
• Events, webinars, and conferences
• Creative production costs

Include all sales-related expenses:

• Sales team salaries and commissions
• Sales software and CRM tools
• Sales training and development
• Travel and entertainment expenses
• Sales office overhead
• Demo equipment and materials

Additional expenses related to customer acquisition:

• Free trial costs and support
• Sample products or demos
• Referral program costs
• Partnership fees
• Customer success costs (if driving new acquisitions)
• Onboarding costs for new customers

Count only new paying customers acquired during the specific time period:

• First-time buyers only (exclude renewals/upsells)
• Must match the same time period as your costs
• Include customers from all channels
• Do not include free users unless they converted to paid

Tip: For SaaS businesses, count only new subscriptions, not existing customer renewals.

LTV represents the total revenue you expect from a single customer over their entire relationship with your business.

Why it matters: The LTV:CAC ratio determines business sustainability:

• < 1:1 - Losing money on every customer
• 1:1 - Breaking even
• 3:1 - Healthy business model (industry standard)
• 5:1+ - Excellent efficiency, consider increasing marketing spend

Formula: LTV = Average Revenue per Customer × Average Customer Lifespan