CAC and LTV Calculator
What a customer costs to win against what they are worth, and how long you wait to get the acquisition cost back.
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Share of customers who leave each month
This calculator runs entirely on your device. Nothing you enter is uploaded, stored, or sold. How this works
LTV to CAC ratio
4.50×
$2,250 of lifetime gross profit against $500 to acquire — healthy — the usual benchmark is 3× or better
Includes your inputs, the full breakdown, and every row of the table.
Customer acquisition cost
$500
$65,000 ÷ 130 customers
Lifetime value
$2,250
Gross profit over the relationship
Payback period
7.4 months
To recover acquisition cost
Average lifetime
33.3 months
At 3.0% monthly churn
- Total acquisition spend
- $65,000
- New customers
- 130
- Cost per customer
- $500
- Monthly gross profit per customer
- $67.50
- Lifetime gross profit
- $2,250
| Monthly churn | Average lifetime | LTV | LTV:CAC |
|---|---|---|---|
| 1% | 100.0 mo | $6,750 | 13.50× |
| 2% | 50.0 mo | $3,375 | 6.75× |
| 3% | 33.3 mo | $2,250 | 4.50× |
| 5% | 20.0 mo | $1,350 | 2.70× |
| 7% | 14.3 mo | $964 | 1.93× |
| 10% | 10.0 mo | $675 | 1.35× |
What this means
- At 3.0% monthly churn the average customer stays 33.3 months. Lifetime value is highly sensitive to that number — halving churn to 1.5% would roughly double LTV to $4,500 without winning a single extra customer.
- LTV is calculated on gross profit, not revenue. At a 75% margin, $90 of monthly revenue is $67.50 of contribution, which is what actually pays back the $500 acquisition cost.
- This uses a constant churn rate, which overstates value for most businesses. Real churn is highest in the first months and falls for surviving customers, so early cohorts leave faster than a flat rate predicts.
How the cac and ltv calculation works
Two numbers decide whether a subscription or repeat-purchase business works: what a customer costs to acquire, and what they are worth once acquired. Customer acquisition cost is total sales and marketing spend divided by the customers that spend produced. Lifetime value is the gross profit a customer generates before they leave.
The relationship between them is more informative than either alone. The widely used benchmark is that lifetime value should be at least three times acquisition cost. Below that, there is too little left over to cover the cost of actually serving customers, the overheads of the business, and the inevitable periods when acquisition gets more expensive. Well above five times usually signals the opposite problem — the business is leaving growth on the table by not spending more.
Payback period is the figure that determines whether you can afford to grow. A business recovering acquisition cost in three months can reinvest quickly and fund its own growth. One taking eighteen months has to finance every new customer for a year and a half, which is a cash flow problem long before it is a profitability problem. Two businesses with identical LTV to CAC ratios can have completely different funding needs.
Churn is the lever with the most leverage, and the least attention. Because average lifetime is the reciprocal of the churn rate, reducing monthly churn from 5% to 2.5% does not improve lifetime value by 2.5 percentage points — it doubles it. Retention work is almost always cheaper than acquisition work, and it improves every future cohort at once.
Frequently asked questions
What is a good LTV to CAC ratio?
Three to one is the common benchmark for a subscription business. Below 3× leaves little room for service costs and overhead; below 1× means each customer destroys value. Consistently above 5× usually indicates underinvestment in growth rather than exceptional efficiency.
Should LTV use revenue or gross profit?
Gross profit. Revenue-based lifetime value overstates the number by whatever your cost of service is, and that error flows straight into the ratio. A business with 40% margins using revenue LTV will believe its economics are two and a half times better than they are.
How do I calculate customer lifetime from churn?
Average lifetime is one divided by the churn rate. At 3% monthly churn, customers last about 33 months. This assumes churn stays constant, which is optimistic — most businesses lose customers fastest in the first few months, so a flat rate tends to overstate value for new cohorts.
What costs belong in CAC?
Everything spent to win new customers: advertising, content, events, sales salaries and commission, and the tools that support them. The honest version excludes spend aimed at existing customers and counts only genuinely new customers in the denominator. Loading in organic or word-of-mouth customers who cost nothing to acquire flatters the number considerably.
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Disclaimer. This calculator is provided for general information and educational purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Results are estimates based on the inputs you provide and the assumptions described above. Confirm any figure with a qualified professional before acting on it.