Evaluate CAC vs. LTV Modeling Strategies for Improved SaaS Profitability



Analyze and evaluate three distinct CAC (Customer Acquisition Cost) and LTV (Lifetime Value) modeling strategies for a hypothetical SaaS company in the project management space.  The company has a freemium model with a monthly subscription for premium features.  Assume the following data points for each model:</p>
<p>**Model 1: Basic CAC/LTV Ratio**<br />
* CAC: $100<br />
* LTV: $500<br />
* Customer churn rate: 10%<br />
* Monthly recurring revenue (MRR): $25,000</p>
<p>**Model 2: Cohort-Based CAC/LTV Analysis**<br />
* Cohort 1 (acquired 6 months ago): CAC $150, LTV $600, Churn 8%<br />
* Cohort 2 (acquired 3 months ago): CAC $120, LTV $500, Churn 12%<br />
* Cohort 3 (acquired 1 month ago): CAC $100, LTV $450, Churn 15%<br />
* MRR: $30,000</p>
<p>**Model 3: Predictive CAC/LTV Modeling (using machine learning)**<br />
* Assume a predictive model has been built using historical data.  This model predicts a CAC of $80 for high-value customers with a predicted LTV of $700 and a churn rate of 5%.  It also predicts a CAC of $120 for low-value customers with a predicted LTV of $400 and a churn rate of 15%. The model predicts a 60/40 split between high and low-value customers.<br />
* MRR: $35,000</p>
<p>For each model:<br />
1. Calculate the key metrics (LTV/CAC ratio, payback period, customer lifetime value).  Show your calculations.<br />
2. Evaluate the strengths and weaknesses of each model in terms of accuracy, predictive power, and actionable insights.<br />
3. Assess the overall profitability and sustainability of each model.  Consider factors like marketing spend efficiency and customer acquisition channels.<br />
4. Recommend the best model and justify your choice based on the analysis.  Explain how the chosen model can inform strategic decisions related to customer acquisition, retention, and pricing.</p>
<p>Deliver your findings in a structured report, including tables and charts to visually represent your data and analysis.  The report should be approximately 500 words.