Business Models & Unit Economics~20 min

How Long Until a Customer Pays You Back?

Your SaaS has a glorious LTV:CAC of 4. The spreadsheet says every $1 of marketing returns $4. So you triple the ad budget.

Three months later you can't make payroll. The spreadsheet wasn't wrong. Something else was.

How can a business with LTV:CAC of 4 run out of cash by spending more on ads?