Customer lifetime value, the LTV:CAC ratio, and how fast you earn back acquisition cost — from four inputs.
LTV = (ARPU × Gross margin %) ÷ Monthly churn % LTV:CAC = LTV ÷ CAC CAC payback = CAC ÷ (ARPU × Gross margin)
The ratio is the headline, but payback is what protects your runway: a 4:1 ratio with a 20-month payback can still starve a cash-tight startup. Investors want 3:1+ and payback under a year. For transactional / D2C, use AOV × orders-per-month as your ARPU and watch repeat-purchase rate, which drives churn.