Calculating LTV of a brand new SaaS biz or other recurring subscription model?

[eqttrdr]

Goal of any business is to acquire new customers.

That CAC should be based on ultimate LTV of that customer - pretty much standard operating procedure for any biz looking to have a positive ROI

HOWEVER

-- How in the world does any recurring subscription biz owner (coaching/SaaS/subscription boxes, etc) know how much they can afford to pay for a new customer if there's no realistic way to calculate long term LTV for the first 2-3 years????


Unless you are going to run traffic first for 2-3 years to eventually get around to seeing how long the average length of subscription turns out to be, how do you ever know your CAC: to LTV ratio?


MUST be something I am missing as there's no way companies would have a solid business plan and continuing scaling unless they knew with almost certainty their average customer lifetime value..... no?

 

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