Answer four quick questions and see exactly how many customers you need, what you can afford to spend to win each one, and the total budget to hit your goal.
Your numbers
How much a customer pays you, on average, per month.
How many months a customer typically stays with you.
The total revenue you want to generate from new customers.
How much lifetime value you want for every unit spent acquiring a customer. 3:1 is a healthy benchmark.
What this means for your business
Each customer pays you $200 per month and typically stays 6 months, so they are worth $1,200 in lifetime value (LTV) to your business.
To keep a healthy 3:1 return on every unit spent, you should not pay more than $400 to acquire a single customer.
Reaching your goal of $12,000 in revenue takes 10 new customers at that lifetime value.
That means a total marketing investment of $4,000 — an average of $400 spent per customer you acquire.
Subtracting that marketing spend from your revenue goal leaves an estimated net profit of $8,000.
Lifetime Value per Customer
$1,200
Max Cost per Customer
$400
New Customers Needed
10
Estimated Net Profit
$8,000
Total Marketing Budget
$4,000