The Math of SaaS Growth

SaaS is a **Money Machine**. You put $1 into marketing (CAC) to get a customer who will pay you $10 over their lifetime (LTV). If your LTV > CAC, you have a business. If not, you have a hobby.

1. LTV (Lifetime Value)

How much money does a customer spend before they churn? $(Calculation: ARPU / Churn Rate)$ *Example: If a user pays $20/month and stays for 12 months, LTV is $240.*

2. CAC (Customer Acquisition Cost)

How much do you spend on Ads/Marketing to get one new customer? *Example: If you spend $1000 on Google Ads and get 10 users, CAC is $100.*

3. The 3:1 Rule

In a healthy SaaS, your **LTV should be at least 3x your CAC**. This ensures you have enough margin to cover your developers' salaries, hosting costs, and your own profit.

4. Career Mastery

Q: "My CAC is higher than my LTV. What do I do?"

Architect Answer: "You have two choices: 1. **Decrease Churn** (Product improvement) to increase LTV. 2. **Increase Pricing**. Often, founders are afraid to charge more. Doubling your price instantly doubles your LTV, which might be exactly what your business needs to become profitable."