The Words,
Defined Properly.

Customer acquisition cost is the total sales and marketing spend divided by the number of customers that spend produced, over the same period.

Take everything spent to win customers in a window: ad spend, the tools, the people, the agency fees. Divide it by the customers who actually signed in that window. Blended CAC counts every channel including the free ones. Paid CAC counts only what the ads produced, which is the number that decides whether you can scale.

ExampleEleven thousand dollars of ad spend in a month producing twenty two customers is a paid CAC of five hundred dollars.

Why It MattersCAC on its own means nothing. It only becomes a decision when you put it beside lifetime value and beside how long the money takes to come back. A five hundred dollar CAC is cheap for a business with a four thousand dollar lifetime value and fatal for one at six hundred.

RelatedCPAGross MarginLTV

Lifetime value is the total gross profit a business expects from one customer across the whole relationship, not the revenue from their first purchase.

Average order value multiplied by purchase frequency multiplied by the length of the relationship, then multiplied by gross margin. The margin step is the one most people skip, and skipping it makes every downstream decision wrong.

ExampleA retainer at two thousand a month, held for fourteen months, at seventy percent gross margin, is a lifetime value of nineteen thousand six hundred.

Why It MattersLifetime value is what lets you outbid competitors for the same customer. Whoever can profitably pay the most to acquire a customer wins the channel, and that is decided by margin and retention rather than by cleverness in the ad account.

RelatedCACChurnCPA

The LTV to CAC ratio is lifetime value divided by customer acquisition cost. It says how many dollars of gross profit each dollar of acquisition spend returns.

Under one means every customer loses money. Around three is the figure usually treated as healthy in subscription businesses. A very high ratio can be a warning rather than a win, because it often means the business is under investing in growth it could afford.

ExampleA nineteen thousand six hundred dollar lifetime value against a five hundred dollar acquisition cost is a ratio of thirty nine to one, which says spend more.

Why It MattersIt is the fastest read on whether a business has a growth problem or a model problem. A model problem cannot be fixed inside the ad account.

RelatedCACLTVPayback Period

Payback period is how long it takes for the gross profit from one customer to repay what it cost to acquire them.

Divide acquisition cost by the monthly gross profit per customer. The answer is in months, and it is a cash flow number rather than a profitability number.

ExampleA five hundred dollar acquisition cost against fourteen hundred a month of gross profit pays back inside the first month.

Why It MattersTwo businesses with identical LTV to CAC can behave completely differently. The one that gets its money back in a month can reinvest twelve times a year. The one that takes fourteen months needs a balance sheet to grow at all.

RelatedCACLTV To CACCPA

Monthly recurring revenue is the predictable subscription revenue a business expects to bill every month, normalised to a monthly figure.

Annual plans are divided by twelve so they do not spike a single month. One off fees, setup charges and usage overages are excluded, because the point of the number is that it repeats.

ExampleNine clients on a two thousand dollar monthly retainer is eighteen thousand of monthly recurring revenue, whatever else was invoiced that month.

Why It MattersRecurring revenue is the difference between a business you own and a job you do again every month. It is why retainers and software are worth more per dollar than project work.

RelatedARRChurnCAC

Annual recurring revenue is monthly recurring revenue multiplied by twelve. It is the annualised run rate of the subscription base as it stands today.

It is a snapshot annualised, not a forecast and not last year. It answers what this business would bill over the next twelve months if nothing changed.

ExampleEighteen thousand of monthly recurring revenue is two hundred and sixteen thousand of annual recurring revenue.

Why It MattersIt is the number businesses get valued on, which is exactly why it gets stretched. Anything non recurring counted inside it is a valuation being borrowed against.

RelatedMRRChurn

Churn is the rate at which customers or revenue leave over a period, expressed as a percentage of what you started with.

Customer churn counts logos lost. Revenue churn counts dollars lost, and the two can point in opposite directions when the customers leaving are the small ones. Net revenue churn subtracts expansion from existing accounts and can be negative, which is the strongest position a subscription business can hold.

ExampleLosing one of twenty clients in a month is five percent customer churn. If that client was the largest, revenue churn is far higher.

Why It MattersChurn sets the ceiling on lifetime value, so it silently sets the ceiling on what you can afford to spend to acquire. Fixing retention raises the budget for everything else.

RelatedMRRLTVARR

Gross margin is revenue minus the direct cost of delivering it, expressed as a percentage of revenue.

Direct cost means what it took to deliver this specific sale: contractor time, hosting, cleaning, materials. Rent and salaries for people not on the work sit below the line.

ExampleTen thousand of revenue delivered by three thousand of contractor time is a seventy percent gross margin.

Why It MattersMargin decides how much of a growth problem you can buy your way out of. It is also the number that separates a service business that scales from one that just gets busier.

RelatedCACCPAEBITDA

Total addressable market is the entire annual revenue available if a product reached every possible buyer of it.

A defensible figure is built bottom up: number of buyers multiplied by realistic annual spend. Top down percentages of an industry report are the version that gets waved at investors and believed by nobody who has sold anything.

ExampleFifteen thousand short term rental owners in a market, spending three thousand a year on management software, is a forty five million dollar addressable market.

Why It MattersIt matters far less than most founders think at the start. A small market you can actually reach beats a huge one you cannot, and distribution is usually the real constraint.

EBITDA approximates the cash a business produces from operations, before financing costs and before accounting decisions about how assets are written down.

Start at net income and add back interest, taxes, depreciation and amortisation. Stripping those out lets two companies be compared on operations alone.

ExampleA company with two hundred thousand of net income, forty thousand of interest and sixty thousand of depreciation has three hundred thousand of EBITDA.

Why It MattersSmall businesses are usually bought on a multiple of EBITDA or of seller discretionary earnings, which makes it the number an acquirer starts from. It is not cash flow. It ignores working capital and the capital expenditure the business actually needs.

RelatedGross Margin

Return on ad spend is revenue attributed to advertising divided by the advertising spend that produced it, expressed as a multiple.

A four times return means four dollars of tracked revenue for every dollar spent. Blended return uses total revenue over total spend across every channel. Platform reported return is what the ad account claims for itself, and it is almost always the more flattering of the two.

ExampleEleven thousand of spend returning forty four thousand of tracked revenue is a four times return on ad spend.

Why It MattersIt is a revenue ratio, not a profit ratio. A four times return on a thirty percent margin product loses money. The only version worth managing to is the one calculated on gross profit.

RelatedCACCPAConversion Rate

Cost per acquisition is advertising spend divided by the number of conversions it produced, where a conversion is whatever event the account is optimising toward.

The event has to be named or the number is meaningless. A cost per lead, a cost per booked call and a cost per paying customer are three different figures often reported under the same label.

ExampleTwo thousand of spend producing forty booked calls is a fifty dollar cost per booked call, not a fifty dollar cost per customer.

Why It MattersMost arguments about whether ads are working are actually arguments about which event is being counted. Define the event first and the argument usually ends.

RelatedCACROASConversion Rate

Click through rate is clicks divided by impressions, expressed as a percentage. It measures whether the creative earned the click.

In paid media it reads the ad, mostly the hook and the image. In search results it reads the title and the meta description against the query.

ExampleA thousand impressions producing twenty clicks is a two percent click through rate.

Why It MattersIt is a diagnostic, not a goal. A rising click through rate with a falling conversion rate usually means the creative is writing a cheque the landing page cannot cash.

RelatedConversion RateCPACPC

Cost per click is what an advertiser pays for one click, calculated as spend divided by clicks.

On most auction platforms it is an outcome rather than an input: it falls out of the bid, the competition and how relevant the platform judges the ad to be.

ExampleFive hundred dollars of spend producing two hundred and fifty clicks is a two dollar cost per click.

Why It MattersChasing a lower cost per click is one of the most common ways to make an account worse. Cheap clicks from the wrong audience cost more per customer than expensive clicks from the right one.

RelatedCPMCTRConversion Rate

Cost per mille is the cost of one thousand ad impressions. Mille is Latin for thousand.

It is what the auction charges for attention before anyone acts. It moves with demand, so it rises in competitive seasons regardless of how good the creative is.

ExampleThree hundred dollars to serve twenty thousand impressions is a fifteen dollar cost per thousand.

Why It MattersCost per thousand is the price of the room. Click through rate is whether people looked. Conversion rate is whether they acted. Reading them in that order tells you which one is actually broken.

RelatedCPCConversion RateCPA

Conversion rate is the percentage of visitors who complete the action a page was built for.

It is only comparable when the denominator and the action are both fixed. A sitewide rate mixes traffic that was never going to convert with traffic that was, which is why page level and channel level rates are the useful ones.

ExampleA landing page taking a thousand visitors and producing thirty enquiries converts at three percent.

Why It MattersConversion rate is usually an offer problem wearing a design costume. If a stranger cannot repeat the offer back in a sentence, the constraint is the offer rather than the button.

RelatedCPACPCCPM

DeFi is financial services built as public smart contracts on a blockchain, so lending, trading and settlement run without a bank or broker holding the assets.

The contract holds the funds and enforces the rules. Anyone can interact with it directly from a wallet, and anyone can read its state, which is why the sector is measurable in a way traditional finance is not.

ExampleDepositing collateral into a lending protocol and borrowing a stablecoin against it, with liquidation rules enforced by code rather than by a credit committee.

Why It MattersThe interesting question is never whether something is decentralised. It is whether the onchain version enables something that was genuinely difficult or impossible before, or whether it is a slower database with a token attached.

RelatedDEXTVLAMM

Total value locked is the current market value of all assets deposited in a protocol or across a chain, usually quoted in dollars.

It is a deposit figure priced at spot. That means it can rise purely because the deposited asset went up, with no new capital arriving at all.

ExampleA lending protocol holding assets worth eight hundred million dollars at today prices has eight hundred million of total value locked.

Why It MattersIt is the most quoted and least reliable metric in the sector. Double counting across protocols is common, and it says nothing about whether the protocol earns anything. Fees and revenue are the harder numbers and the ones worth reading.

RelatedDeFiAMMDEX

A decentralised exchange lets users trade tokens directly from their own wallets through smart contracts, without depositing funds with an exchange.

Most run an automated market maker rather than an order book. You trade against a pool of assets supplied by other users, and the price moves along a formula as the pool changes.

ExampleSwapping one token for another straight from a wallet, with the rate set by the pool balance rather than by a matched buyer.

Why It MattersSelf custody is the actual product. You keep the keys and you accept what comes with them, including the fact that a mistaken transaction has nobody to reverse it.

RelatedAMMDeFiMEV

An automated market maker prices trades with a formula against a pool of deposited assets, replacing the buyers and sellers of a traditional order book.

Liquidity providers deposit both sides of a pair. The formula moves the price as the ratio in the pool shifts, so a large trade moves the price against itself. That gap is slippage.

ExampleA pool holding two assets where every swap of one for the other changes the ratio, and therefore the next quoted price.

Why It MattersIt is the mechanism that made onchain trading work without a central operator. Liquidity providers earn fees and carry impermanent loss, which is the part usually left out of the yield number.

RelatedDEXDeFiMEV

Maximal extractable value is the profit that can be taken by choosing the order of transactions in a block, over and above the normal fees and rewards.

Pending transactions are public before they are confirmed. Anyone able to influence ordering can insert their own transactions around a trade, most visibly by buying just before a large order and selling just after it.

ExampleA trade large enough to move a pool price, front run and then back run in the same block, so the profit comes out of the original trader execution.

Why It MattersIt is a tax on execution paid by ordinary users who never see the line item. One of the clearest cases where the mechanism, not the token, is the thing worth understanding.

RelatedDEXAMMDeFi

Real world assets are traditional off chain assets such as treasuries, credit, property or commodities represented as tokens on a blockchain.

A custodian or issuer holds the underlying asset and issues tokens that claim it. The blockchain handles transfer and settlement. The legal claim on the asset remains an off chain arrangement.

ExampleA tokenised money market fund holding short dated government debt, transferable onchain in minutes rather than settling in days.

Why It MattersThe honest question with any real world asset is what happens when the token and the custodian disagree. The technology solves settlement. It does not solve counterparty risk, and pretending otherwise is where most of the sector goes wrong.

RelatedTokenizationStablecoinAMM

Tokenization is issuing a blockchain token that represents ownership of, or a claim on, an asset that exists outside the blockchain.

The token becomes the transfer mechanism. Ownership moves when the token moves, which compresses settlement from days to minutes and makes fractional ownership straightforward.

ExampleA property split into tokens so a share can change hands without a conveyance for every trade.

Why It MattersIt is worth it where settlement, fractionalisation or access is the actual constraint. Where the constraint is legal or regulatory, a token changes nothing except the speed at which you reach the same wall.

RelatedRWAAMMDeFi

A stablecoin is a token designed to hold a constant value against a reference, almost always the US dollar.

Fiat backed stablecoins hold cash and short dated debt against every token issued. Crypto backed designs are over collateralised with volatile assets. Algorithmic designs attempted to hold the peg with supply mechanics alone and have repeatedly failed.

ExampleSettling an invoice in a dollar denominated token in minutes, at any hour, without a correspondent bank in the path.

Why It MattersStablecoins are the part of the sector with obvious product market fit. Payments and settlement are a real problem being solved for real users, which is more than most categories can claim.

RelatedRWADeFiAMM

Staking is committing tokens to help secure a proof of stake blockchain, in return for a share of newly issued tokens and fees.

Stake backs a validator. Validators that follow the rules earn rewards, and validators that misbehave can have stake destroyed, which is what makes the security economic rather than merely technical.

ExampleDelegating tokens to a validator and receiving a share of that validator rewards, minus a commission.

Why It MattersA staking yield quoted in the same token is not a return in the way an interest rate is. If the token halves, a nine percent yield paid in it did not protect anything.

RelatedAMMDeFiDEX

Average daily rate is the average nightly price actually achieved, calculated as room revenue divided by the number of nights booked.

It counts only booked nights, so it measures pricing power rather than demand. It excludes cleaning fees and taxes, which is why a listing can look cheap on rate and expensive at checkout.

ExampleSix thousand dollars of room revenue across twenty booked nights is a three hundred dollar average daily rate.

Why It MattersRate and occupancy trade against each other. Raising one usually lowers the other, which is why neither is a target on its own and revenue per available night is the number that settles it.

RelatedOccupancyRevPARDynamic Pricing

Occupancy is the percentage of available nights that were booked in a period.

The denominator is the argument. Blocking nights for owner stays or maintenance removes them from availability and flatters the rate, so two operators can report very different occupancy on identical calendars.

ExampleTwenty two nights booked out of thirty available is seventy three percent occupancy.

Why It MattersA full calendar at the wrong rate is a loss. Occupancy is the easiest number to move and the easiest one to move in the wrong direction, because dropping price fills nights and empties the year.

RelatedADRRevPARDynamic Pricing

RevPAR is average daily rate multiplied by occupancy, or equivalently room revenue divided by every available night rather than only the booked ones.

Because it uses available nights as the denominator, it captures rate and fill in one figure and cannot be gamed by trading one against the other.

ExampleA three hundred dollar average daily rate at seventy three percent occupancy is a revenue per available night of two hundred and nineteen dollars.

Why It MattersThis is the number to manage a short term rental on. It is the one that goes down when you discount into a full calendar and the one that goes up when pricing is actually working.

RelatedADROccupancyDynamic Pricing

A property management system is the central software a short term rental operation runs on, holding the properties, calendars, reservations and operational tasks in one place.

It sits above the booking channels. Reservations from every platform land in one calendar, and the work each reservation creates, cleaning, maintenance and messaging, is dispatched from the same record.

ExampleA single calendar showing every property across Airbnb and Vrbo, with the turnover for each checkout already assigned.

Why It MattersRunning several properties across several channels through each platform separately does not scale past a handful of doors. The system is what turns a set of listings into an operation.

RelatedChannel ManagerDynamic PricingADR

A channel manager keeps availability, rates and reservations synchronised across every booking platform a property is listed on.

It holds one source of truth for the calendar and pushes changes out to each channel, so a booking on one platform immediately blocks the same dates everywhere else.

ExampleA booking taken on one marketplace closing those nights on the other within seconds, without anyone touching a second calendar.

Why It MattersWithout it the failure mode is a double booking, and a double booking costs a cancellation, a refund and the rating that pricing power depends on.

RelatedPMSDynamic PricingADR

Dynamic pricing sets a different nightly rate for every date based on demand signals, rather than holding one rate across a season.

Pricing tools read comparable listings, booking pace, day of week, lead time and local events, then move each night independently. Rates are reviewed continuously rather than set once.

ExampleRaising rates on the nights around a sold out event while lowering the midweek nights either side of it.

Why It MattersA static rate is wrong on almost every date. Weekly repricing is the highest leverage habit in a short term rental operation, and it moves revenue per available night rather than just occupancy.

RelatedADRRevPARChannel Manager