The 2.2:1 Ratio That Fails the Gate
Ada re-derives this chapter’s own numbers step by step, at full precision
ADA · CALCULATION AUDIT
The 2.2:1 Ratio That Fails the Gate
A B2B IoT vendor spends $30,800 to win each new customer, then earns $50,000 in hardware plus $12,000/year of SaaS over a five-year relationship. Run through the chapter’s 40% and 80% margins, that lifetime value works out to $68,000, for an LTV:CAC of 2.2:1 — and the golden rule demands at least 3:1. This audit re-derives every step to ask whether the ratio really falls short of the gate, and by how much.
Companion to the chapter Go-to-Market Strategy — every number here comes from that chapter.
Ada: The chapter builds a customer-acquisition cost from a $1.54M sales-and-marketing budget, then tests it against a five-year lifetime value. The verdict – 2.2:1 – falls below the 3:1 gate, so every step deserves a check, because this ratio decides whether the model ships as priced.
- CAC from the budget:
1,540,000 / 50 = 30,800per new customer. - Hardware gross profit at 40% margin:
50,000 x 0.40 = 20,000. - SaaS gross profit at 80% over five years:
12,000 x 5 x 0.80 = 48,000. - Lifetime value:
20,000 + 48,000 = 68,000. - LTV:CAC:
68,000 / 30,800 = 2.2078, which rounds to 2.2:1.
Every step holds. The design meaning is that 2.2 sits below the 3.0 threshold by arithmetic, not by opinion: to clear the gate the team must lift LTV to at least 3 x 30,800 = 92,400 or cut CAC to at most 68,000 / 3 = 22,667 – which is precisely why the chapter’s three remedies (channel partners to lower CAC, higher pricing, or a longer customer lifetime) are the only levers that move this number.
Every number above is taken from the chapter’s own material and re-derived step by step.