Customer Acquisition Cost (CAC) vs. Customer Lifetime Value (CLV)
Compare acquisition cost with discounted contribution over an explicit customer horizon.
Cheat sheet
Compare acquisition cost with discounted contribution over an explicit customer horizon.
What to check first
Calculate CAC from net new customers and keep cohort windows aligned.
How to make the call
Stress-test churn and fulfilment costs before setting bids.
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Indian practice case
Fictional scenario
A Bengaluru D2C coffee subscription acquires 400 customers for ₹1.2 lakh. Each generates ₹120 monthly contribution and expected survival is 100%, 80%, 60% and 50% over four months.
Reveal the step-by-step solution
- Diagnose the problem.
Calculate CAC from net new customers and keep cohort windows aligned.
- Work through the evidence.
CAC is ₹300. Undiscounted expected four-month contribution is ₹348 and contribution after CAC is ₹48.
- Recommend and validate.
Stress-test churn and fulfilment costs before setting bids.
More Indian cases
Interview question
How would you use customer acquisition cost (cac) vs. customer lifetime value (clv) to make the decision in this case? Explain which data you need first and what would change your recommendation.
See what a strong answer includes
CAC is ₹300. Undiscounted expected four-month contribution is ₹348 and contribution after CAC is ₹48. Stress-test churn and fulfilment costs before setting bids.