CAC & LTV Calculator
Two of the most important numbers in any business: what it costs to win a customer (CAC) and what they are worth over time (LTV). Enter a few figures to see both, plus your LTV:CAC ratio and payback period.
Why LTV and CAC decide if growth is profitable
Two numbers decide whether a business that spends money to win customers can actually thrive: what it costs to acquire a customer (CAC) and what that customer is worth over their lifetime (LTV). The ratio between them — and how quickly the acquisition cost is paid back — is the difference between growth that funds itself and growth that quietly burns cash on every new signup.
This is the single most important relationship in subscription, SaaS and many e-commerce businesses. When LTV comfortably exceeds CAC, spending more to grow makes sense. When the ratio slips, the answer is almost never ‘spend more on ads’ — it is to improve retention and margin so each customer is worth more.
The formula
CAC = Total sales & marketing spend ÷ new customers won in the same period. LTV = Average revenue per customer per month × gross margin % × average customer lifespan in months. The LTV:CAC ratio compares the two, and CAC payback = CAC ÷ (monthly revenue × gross margin) — the months it takes to earn back the cost of winning a customer.
Worked example
| Item | Value |
|---|---|
| Sales & marketing spend | $20,000 |
| New customers won | 150 |
| CAC | $133 |
| Revenue per customer / month | $50 |
| Gross margin | 70% |
| Average lifespan | 24 months |
| LTV | $840 |
| LTV : CAC | 6.3 : 1 |
| CAC payback | ~3.8 months |
When to use it
- Checking whether a subscription or SaaS business is fundamentally profitable.
- Comparing the efficiency of different marketing channels.
- Deciding whether it is safe to scale up ad spend.
- Setting a target payback period before committing to growth.
Assumptions & what’s not included
- LTV depends on retention, which is an estimate — be conservative with lifespan.
- It uses gross margin, so make sure you enter margin, not raw revenue.
- Blended CAC (all channels together) can hide a weak channel; run channels separately where you can.
- A ratio around 3:1 or better is widely considered healthy, but the right target varies by industry.
Frequently asked questions
What is a good LTV:CAC ratio?
A common rule of thumb is 3:1 or higher — each customer should be worth at least three times what it costs to acquire them. Below 1:1 you are losing money on every customer; far above 3:1 can mean you are underinvesting in growth.
What is CAC payback period?
It is how many months of gross profit from a customer it takes to earn back the cost of acquiring them. Under roughly 12 months is generally considered healthy for a subscription business.
How do I estimate customer lifespan?
If you know your monthly churn rate, average lifespan is roughly 1 divided by that churn rate. For example, 4 percent monthly churn implies an average lifespan of about 25 months.
Is my data private?
Yes. Everything runs in your browser. Nothing is sent to a server, stored or shared, and there is no sign-up.