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Customer acquisition cost



Suppose Sergio owns a software development company called Web App Development. In order to obtain his CLV, he needs to study the past performance of his business. The 3 “past behaviors” he should focus on are the average annual transaction volume per customer, the average profit per transaction, and the average number of years people keep their customer status. Regarding the average annual transaction volume per customer, he pointed out that most of his customers buy once a year. In order to get the average profit of each transaction, he looks at the average bill of the end customer, which is 1,000 euros per person. After deducting hosting and other expenses, the developer hour Sergio estimates that he gets 25% of the profit from each bill-that is, the profit per customer is 250 euros.


business management

customer lifetime value calculation

customer acquisition cost

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