Comment "calculator" and I'll send you the Google Sheet.

We had our best month ever. 300 leads. And our CFO says we lose money on every single customer. Let me guess, you only counted ad spend. We spent 20 grand on ads and got 4 customers. That's 5,000 each. And who closed those 4 customers, Peter? Elves? Your customer acquisition cost includes everything it took to win them.

Sales salaries, commissions, tools, and that agency you keep forgetting, you pay. Say that's 80 grand a month, all in, 4 customers, 20,000 each. Almost every SaaS founder makes this mistake once, usually in front of the board.

So I'm 4 times worse than I thought. Welcome to finance. But acquisition cost alone means nothing. You need the other side. Lifetime value. That's what a customer's worth over the whole time they stay. Counted in gross profit, not revenue.

If they pay 24,000 a year, your margin is 80%. And they stay 4 years, that's about 77,000. Okay, that sounds better. Now divide lifetime value by acquisition cost. 77,000 by 20,000 is almost 4 to 1.

For every dollar you spend winning a customer, you get almost 4 back. Most boards want at least 3. So we're fine. The CFO was wrong. Your CFO was half right. Each customer brings in 1,600 a month in gross profit. So it takes about 12 and a half months to earn back that 20,000.

That's called payback. For the first year, you really do lose money on every customer. Is that bad? It depends on your runway. A year to get your money back is fine. If you have 3 years of cash. If you have 9 months, you're funding growth with money you don't have.

Which is also how you paid for the Patagonia vest. How do I work all this out before the next board meeting? Comment calculator. And I'll send you the sheet. Put in your numbers. And it gives you your lifetime value, your payback, and the most you can pay for a booked call to hit your targets.

and the most you can pay for a booked call to hit your targets.