Day 4

Module 1: Foundation & Market Positioning Know the numbers that matter before you spend a dollar on growth.

Today's Learning

Growth without unit economics is a path to bankruptcy. Today you will calculate the fundamental financial metrics that govern every decision in your test prep business. These numbers tell you what you can afford to spend, what you should charge, and whether your business model is fundamentally sound.

Start with Cost Per Acquisition (CPA). Add every dollar you spend to attract and enroll a student: advertising, marketing tools, website costs, time spent on sales calls, and any referral fees. Divide this total by the number of students enrolled in the same period. If you spent $3,000 on marketing and enrolled 20 students, your CPA is $150.

Next, calculate Lifetime Student Value (LSV). Take the total revenue a typical student generates across their entire relationship with you. Include the initial program, any additional hours, follow-up sessions for retakes, sibling enrollments, and referrals they generate. If a student pays $2,000 for an SAT program and 20% of students return for ACT prep at $1,500, and each student generates 0.3 referrals, your LSV is significantly higher than the initial transaction.

The LSV-to-CPA ratio is your growth fuel gauge. A ratio below 3:1 means your acquisition is too expensive or your student value too low. A ratio above 5:1 means you have room to invest aggressively in growth. Most healthy test prep businesses operate between 4:1 and 8:1.

Calculate your gross margin per student: total program price minus direct costs (tutor wages, materials, platform fees). If you charge $2,000 for a program and pay a tutor $800, your gross margin is $1,200 or 60%. Aim for 60-75% gross margins on 1-on-1 programs and 70-85% on group programs.

Daily Action Items

1. Calculate your Cost Per Acquisition (CPA) for the last 12 months
2. Calculate your Lifetime Student Value (LSV) including referrals and repeat business
3. Compute your LSV-to-CPA ratio
4. Calculate gross margin percentage for each service type you offer
5. Identify which service type generates the highest margin per hour of your time

Key Takeaway

Your LSV-to-CPA ratio tells you how fast you can grow. Know this number before you spend another dollar.

Clozo Academy Proprietary Curriculum — The Test Prep Growth System