[seanellis]

I actually model allowable acquisition cost on expected first year average revenue per user (less any marginal service costs like bandwidth or storage). The key variables are % of users that have a transaction and the average transaction size. If you have a monthly recurring fee, then you also have to consider churn. I'd recommend a conservative estimate of an average of six months of revenue in the first year for each paying customer on a monthy recurring fee. Annual fee is obviously the entire transaction size. Hope this makes sense.

Sean Ellis (startup-marketing.com, led early marketing at both Dropbox and Xobni)