Cashflow Rules Everything Around Mepic.twitter.com/7CNGINyzHs
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Maybe you should add that operating at net loss also does not mean they have positive unit economics.
Or a net gain, interestingly.
I think the
between every word is better used when it's a universal truth that is important for everyone to understand. If people don't understand your above statement, it might not be a net loss to society.
Please, replace
by
.
Explain.
If the lifetime value if a customer is greater than the cost per acquisition of a customer, you have a viable business and will be profitable long-term. However, in early years, your operating costs may exceed your revenue.
Hello! Right know I'm trying to understand Amazon's negative profit years. Can you tell me where to look at on their financial statements to understand what you said about lifetime value and cost per acquisition? Thanks!
Example: suppose your average customer subscribes for 5 years and you make $10 per year from that customer. LTV = $50. If you pay $20 per acquisition, great! You are paying $20 for a customer worth $50, profit. But in year 1, you pay $20 to acquire customer, and only make $10.
Thank you very much! Great example! Looks like at the end it's all about the long-term in Amazon...
Yup + there’s many valid variations on that theme e.g. just because a company decided to delay monetisation doesn’t mean it doesn’t have a business model (insert all the
).
isn’t this Managerial Accounting 101 - understanding contribution margin ?
snapchat be like:
It can be hard to predict. Many startups think their unit sales-and-marketing costs will decrease, but end up wrong.
You are right
when that person replied to you, I realized something (lemme know if you experience the same or if I'm totally wrong): Often I'll say some abstract idea that I'm pondering about. Then I'll give an example of the idea in practice.
Then someone will nitpick at the example, ignoring the abstract idea that I'm trying to convey
Unit economics can be manipulated by cost accounting.
But do they have negative contribution margins for their entire product line?
Yes uber*
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