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CAC + LTV Calculator

Compute Customer Acquisition Cost, Lifetime Value, LTV:CAC ratio and payback period for any subscription or e-commerce business. Updates live as you type — no signup, no email gate.

Monthly revenue per paying customer (MRR / customer count).

% of paying customers who cancel each month.

Revenue minus COGS, as % of revenue. SaaS typical: 70-85%. DTC: 30-60%.

All sales + marketing spend / new paying customers acquired in the period.

How this calculator works

Two formulas, switched by your business-model choice. Both apply gross margin (not revenue) because acquiring a customer at revenue parity still loses money once you pay for the cost of goods or services delivered.

SaaS / subscription

LTV = (ARPU × Gross Margin %) ÷ Monthly Churn % — this is the steady-state present value of a customer assuming churn is constant. It is the formula Bessemer and a16z publish in their SaaS metrics guides. The implicit average customer lifespan is 1 / churn months — at 3% monthly churn that is ~33 months.

E-commerce / one-off

LTV = AOV × Gross Margin % × Avg purchases per customer — the simple cumulative-purchases view. For DTC brands this is more honest than applying a churn formula because purchase cadence is irregular and most cohorts go quiet after 12-24 months anyway.

LTV : CAC ratio thresholds

  • Below 1 : 1 — you lose money on every customer. Stop acquisition until unit economics work.
  • 1 : 1 – 3 : 1 — viable but thin. Hard to invest in product, team or scaling.
  • 3 : 1 – 5 : 1 — healthy. The industry benchmark.
  • Above 5 : 1 — under-investing in growth. You can probably afford more aggressive acquisition.

Payback period

Payback = CAC ÷ (ARPU × Gross Margin %) for SaaS — months of gross-margin revenue needed to recover CAC. The cash-flow companion to LTV:CAC. A 4:1 ratio with 24-month payback can still kill a bootstrapped business if working capital runs out before the LTV materializes.

FAQ

What is a healthy LTV:CAC ratio?
3:1 is the industry benchmark for sustainable growth. Below 1:1 means you lose money on every customer. 1:1–3:1 means you can grow but margins are thin and you have little room to invest in product or scale. Above 3:1 is healthy. Above 5:1 often means you are under-investing in growth and leaving share on the table.
How is LTV calculated here?
For subscription / SaaS: LTV = (ARPU × Gross Margin %) / Monthly Churn %. For e-commerce / one-off: LTV = AOV × Gross Margin % × Average purchases per customer. The calculator switches the formula based on your "business model" choice. We use gross margin (not revenue) because acquiring a customer at gross-revenue parity still loses money once you pay for the product or service delivered.
What CAC should I include?
Fully-loaded CAC: all sales + marketing spend (ad spend, team salaries, tooling, agency fees, content production) divided by net new paying customers in the same period. Many founders only count ad spend — that understates true CAC by 2–3×.
Why is payback period important separately from LTV:CAC?
LTV:CAC is a steady-state ratio. Payback is how long your cash is locked up. A 12-month payback with a 4:1 LTV:CAC is fine if you are well-funded; a 24-month payback even with the same ratio can starve a bootstrapped business of working capital before you ever see the LTV materialize.
Do you offer help if my numbers look bad?
Yes — we run a free 60-min audit of your acquisition funnel + CAC by channel. We tell you within a week which channels are healthy and which are quietly bleeding. Book via the link below.

Numbers look off?

We run a free 60-minute audit of your acquisition funnel + CAC by channel. By the end of the week you have a single answer: which channels are healthy, which are quietly bleeding, and the 2–3 highest-ROI fixes to apply this quarter.

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