DECKO DICTIONARY
ALL TERMS
LTV (Customer Lifetime Value)
It all begins with an idea.
The estimated total revenue a business can expect to generate from a single customer over their entire relationship with the company
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Example: The LTV of our average customer is $1,500. They subscribe to our service for $100/ month and typically stay subscribed for 15 months. This justifies our CAC (Customer Acquisition Cost) of $200 per customer
GROSS MARGIN
It all begins with an idea.
The difference between total revenue and COGS, expressed as a percentage of total revenue.
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Example: Our gross margin is 50%, indicating efficient cost management. We spend $30 to produce our product but sell it for $60.
COGS (Cost of Goods Sold)
It all begins with an idea.
The direct costs associated with producing or delivering a product
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Example: Our COGS for each unit is $30, allowing us to maintain a healthy gross margin as we sell it for $60.
CHURN
It all begins with an idea.
The rate at which customers stop using or subscribing to a service
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Example: Our churn rate has decreased by 20% since implementing our new onboarding process.
CASH-OUT DATE
It all begins with an idea.
The day in which a company will run out of cash if they continue to burn capital at their current pace and do not raise any additional capital.
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Example: With $1M in the bank and a burn rate of $100,000/ month, we are looking at a Cash-Out Date of October 1st (10 months from today). We should raise money soon to avoid going out of business.
CAC (Customer Acquisition Cost)
It all begins with an idea.
The cost a company incurs to acquire a new customer, including marketing and sales expenses
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Example: Our CAC is $200 per customer, and our goal is to bring it down while maintaining customer quality.
BURN RATE
It all begins with an idea.
The rate at which a company spends its cash reserves or funding to cover expenses before generating positive cash flow.
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Example: This month, we did $200,000 in revenue but had $250,000 in expenses. Our burn rate is $50,000 per month so we need to secure additional funding to extend our runway.
ARR (Annual Recurring Revenue)
It all begins with an idea.
The total yearly revenue generated from subscription-based products or services.
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Example: Our ARR is $600,000 as we have $50,000 per month in subscription revenue.
TEMPLATE POST
It all begins with an idea.
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