When does CAC payback period matter more than LTV:CAC ratio?

CAC payback matters more whenever cash, not theoretical lifetime value, is the binding constraint — which is most early-stage and bootstrapped companies. LTV:CAC tells you if a customer is profitable eventually; payback tells you how long you're funding that customer's acquisition cost out of your own cash before it's returned. A startup with runway measured in months should weight payback heavily, since a great LTV:CAC ratio with a two-year payback can still burn the company out before the value ever shows up.

Well-funded, growth-stage companies with longer runway can tolerate longer payback in exchange for better long-term LTV:CAC — the trade-off flips with your cash position.

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