When determining your CAC goal there are two types of data we need: 

1. Part 1 is Profitability: providing your unit economics, current revenue targets and business overhead expenses 
2. Part 2 is focused around your business model and current customer LTV (understanding your offer and repeat revenue). 

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Those 2 factors will determine which model you should use to find the best CAC goal for your brand. 

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Here are three financial models and in each model it shows you could have an nCAC site goal of:  

• $77 nCAC 
• $63 nCAC 
• $43 nCAC 

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The initial thought you likely have as a marketer is to choose the goal with the highest CAC so we can scale quicker. That could be the right decision if you have this going on with your business: 

1. You have cash on hand so when you scale and aren’t profitable on first purchase, you can cover inventory and business expenses as you wait for a payback on that customer. 
2. You have a strong LTV to support this higher CAC. 

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If you are a business owner, you might be thinking the opposite: you want to choose the goal with the lowest CAC, so that you can be the most profitable. However, this could limit your ability to scale, or could turn out to be unrealistic (too low) depending on the market conditions.

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In these scenarios, you will determine: 

1. Do I want to be profitable on first purchase - for brands with a low or not LTV this is likely the financial model you must use. 
   
   1. Choose our "Profitable on First Purchase” scenario and set a first purchase profitability goal. 
2. If it’s okay to breakeven on first purchase - this is good for brands that are looking to scale but don’t have a lot of cash on hand month over month. 
   
   1. Choose our “Breakeven on First Purchase” scenario 
3. If you want to rely on LTV to acquire first time purchasers - this is great for brands with a strong subscription business and a high LTV. Additionally, this is great for brands with lots of cash or investors that are looking for high growth. 
   
   1. Choose our “LTV/CAC Ratio Target” scenario. 

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In filling out our Know Your Numbers sheet we will provide you with the three CAC options you can choose from, but it’s your choice to determine which of these models best fits your business needs. If you need more assistance, reach out and set up a call and we can provide more guidance.

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