Phil Risher breaks down customer acquisition cost: spend 5-10% of a customer's lifetime value to acquire them. For a $1,000 LTV customer, that's $50-$100. Overall marketing budget should be 3-10% of revenue, so a $1 million business spends $30,000-$100,000.
When you think of customer acquisition cost, CAC, yeah, there's a formula for this. It's basically your lifetime value of a customer. So let's say it's $2,000, $3,000, it's 5 to 10% of that. So let's say it's $1,000, you'd be willing to spend $50 to $100 to acquire that customer. And another way to look at this is your marketing budget should be about 3 to 10% of your revenue. So if you're doing $1 million in revenue, it should be $30,000 to $100,000.
