
Most of the Cloud Business Models Have Been Wrong - ezxs
http://www.mikebz.com/2016/02/most-of-cloud-business-models-have-been.html
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ezxs
Many Cloud startups have built their business models assuming that the cost of
acquiring a customer can be recouped in a reasonable amount of time through
recurring revenue. These calculations based on Customer Acquisition Costs
(CAC) and Long Term Value of the customers (LTV) have omitted a major factor
in running a recurring revenue business – Customer Management Costs (CMC). As
a result, a lot of the Cloud Startups are overvalued because investors
incorrectly assume there will be little or no marginal cost to maintain
recurring revenue from existing customers.

