Article

How to Measure CAC in a Two-Sided Marketplace

Natalie Luu (Lightspeed Venture Partners) · Natalie Luu, Lightspeed Venture Partners (Medium) Free Intermediate

Most CAC math quietly assumes one funnel, and that breaks the moment you have to pay to acquire both sellers and buyers. This piece walks through a fully burdened, two-sided CAC: it allocates seller acquisition cost across the buyer base using your seller-to-buyer ratio, with a worked example you can copy into a spreadsheet. It is the practical companion to the a16z framing, the how after the what.

  • A real marketplace CAC blends buyer and seller acquisition cost, weighted by how many sellers you need per buyer
  • The seller-to-buyer ratio is the lever that decides how heavy each order really is to acquire
  • Work it with concrete numbers (their sellers cost 500 each) so your LTV/CAC reflects both sides, not a flattering single-side figure
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The question it answers

  1. How do I model unit economics for a marketplace where I have to acquire both supply and demand?

Read with it

  1. This is the canonical a16z reference that defines the marketplace vocabulary you actually need before you build a model: GMV vs... Andreessen Horowitz (a16z) Essay 13 Metrics Every Marketplace Company Should Track Jeff Jordan, Li Jin, D'Arcy Coolican, Andrew Chen (a16z)
  2. Before you tune CAC and take rate, this book gives you the structural picture of why marketplace economics compound: network... W. W. Norton & Company Book Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary
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