B2B & Startup Rules of Thumb
The Rule of 40
A core SaaS valuation metric. A company's year-over-year revenue growth rate plus its EBITDA profit margin should equal or exceed 40%.
12-Month CAC Payback
Ideally, a startup should recover the cost of acquiring a customer (CAC) within 12 months. This ensures rapid cash flow recycling to fund further growth.
The 3:1 LTV Ratio
If your Lifetime Value (LTV) is less than 3x your CAC, you are spending too much to acquire customers. If it is over 5x, you are likely under-investing in marketing.