The document discusses defining the primary customer for a potential transcription service business. It estimates the market size and potential lifetime value (LTV) per customer. It then discusses how to calculate the cost per acquisition (CPA) and compares it to LTV to determine if advertising can generate a positive return. Key strategies for keeping CPA low like organic search, word-of-mouth, and virality are mentioned. The document emphasizes that comparing LTV to CPA is the key metric for validating business ideas.

1. LTVVS CPA
Defining your
Customer

2. Let’s say you have an idea for transcription
service for Masters/PhD/University Researchers
as your Primary Customer.
• Market Size 8MM
• On average each researcher will do 10hrs of research that requires
transcription/year = 80MM hrs of transcription in that market in North America.
• You charge 15$/hr of audio.
• Average Length of Study 4 years = 10hrs/yr x 15$/hr x 4yrs = $600/customer
(average) Margin 50% = $300
• LTV/Education Customer = $300. (Do they add to network effects? Referrals?)
Latent value can be assumed but not included here.
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Canada Web: www.10Count.ca Rob: Rob@10count.ca | Matt: Matt@10count.ca

3. CPA: Cost Per Acquisition
• Lets say we’re using the FB example above. The cost per
click is $1.00.
• That means I get 300 clicks before I’m loosing money if we
look at LTV alone
• Can I pay for advertising (acquisition method) and still get
a return ?
• If your Cost Per Acquisition is lower than Your LTV step on
the Gas. You have yourself a money making business.
The World Exchange Plaza Toll Free: 1 866 964 6931 Providing enterprise level order fulfilment, real-time
1150-45 O’Connor Street Facsimile: 1 866 391 5954 provisioning and life-cycle management with custom
Ottawa, Ontario, K1P 1A4 Email: info@10Count.ca software solutions.
Canada Web: www.10Count.ca Rob: Rob@10count.ca | Matt: Matt@10count.ca

4. CPA Continued:
This is where smart marketing/product development comes in:
Key Free CPA mechanisms:
• Organic Search
• Word of Mouth
• Virality and Network Effects
The World Exchange Plaza Toll Free: 1 866 964 6931 Providing enterprise level order fulfilment, real-time
1150-45 O’Connor Street Facsimile: 1 866 391 5954 provisioning and life-cycle management with custom
Ottawa, Ontario, K1P 1A4 Email: info@10Count.ca software solutions.
Canada Web: www.10Count.ca Rob: Rob@10count.ca | Matt: Matt@10count.ca

5. LTV vs CPA is our Key Metric
Once we have an idea:
• We’ve validated people are looking for it or are interested
• We’ve defined some acquisition methods and have a
handle on LTV
• Lets RockBuild!
See: Bootstrapping a Business
The World Exchange Plaza Toll Free: 1 866 964 6931 Providing enterprise level order fulfilment, real-time
1150-45 O’Connor Street Facsimile: 1 866 391 5954 provisioning and life-cycle management with custom
Ottawa, Ontario, K1P 1A4 Email: info@10Count.ca software solutions.
Canada Web: www.10Count.ca Rob: Rob@10count.ca | Matt: Matt@10count.ca