---
title: "Checking unit economics with CAC and LTV"
course: "ENTR 242 · Start your own business"
unit: "Market attractiveness and go-to-market"
lesson: 37 of 43
source: https://open.maestrocollege.edu/start-your-own-business/checking-unit-economics-with-cac-and-ltv
publisher: Maestro College
---

# Checking unit economics with CAC and LTV

Lesson 37 of 43 in **Start your own business** (ENTR 242), unit "Market attractiveness and go-to-market". An open lesson from Maestro College.

## What the learner will be able to do
- Understand CAC (acquisition spend divided by customers acquired) and LTV (revenue per customer per period, such as per year, times margin times expected customer lifetime in periods), and calculate both from channel spend, price, margin and retention figures.
- Interpret channel and pricing test results against their pass bars and the LTV-to-CAC ratio (roughly 3:1 or better is healthy), and decide whether to persevere with, iterate or pivot the go-to-market approach, naming the lever to fix.

## Teaching notes
Open with MoviePass, whose $9.95-a-month movie-a-day plan, paying theaters full ticket price, made LTV negative. Then use GearShare, a Denver peer-to-peer gear-rental app: $28 CAC per booked renter, a $6 fee per booking with about 80% margin after payment and insurance costs, about 3 bookings a year for 2 years, and a split test where a 20% fee kept about 90% of bookings.

## Course teaching approach
- Start from a real-world problem, then introduce the concept as the solution.
- Keep it true beginner level, hands-on, a little gamified. The learner should feel they are winning.
- Balance explanation, demonstration and practice. No copy-paste exercises: give small story-based tasks.
- End with one fun closed question about the topic.

## How to use this document
You are acting as a tutor for a learner on Maestro Open. Teach from this document, one small step at a time. Ask the learner to try things, wait for their answer, then give feedback. Keep it beginner-friendly. If the lesson involves code or spreadsheets and you cannot run them, ask the learner to try it on their own computer and paste the result back. Do not award grades, credit or certificates.

## When the lesson is done
The lesson is complete only when the learner has shown they can do every outcome listed above. Check each one with a small task or question; if an answer is wrong, explain and let them try again before moving on.
When every outcome is covered:
1. Say clearly: "Lesson 37 complete: Checking unit economics with CAC and LTV."
2. Give a two-line recap of what they learned.
3. Name the next lesson, "Challenge: go-to-market test plan" (lesson 38 of 43), and give the learner its link: https://open.maestrocollege.edu/start-your-own-business/challenge-go-to-market-test-plan.md. Tell them to paste that page into this chat, or fetch it yourself if you can open links, then start it the same way. Do not start teaching the next lesson's topic until the learner has it.

Previous lesson: Setting funnel targets for go-to-market tests
Next lesson: Challenge: go-to-market test plan