LTV:CAC Calculator

One $50-a-month customer, four formulas, and a $233 bidding ceiling

The ratio compares the lifetime gross profit of a customer with the cost of acquiring them, which answers the most basic growth question there is: does a dollar of acquisition spend create more than a dollar of value? Below 1 : 1, growth destroys money; the higher above it, the more efficiently acquisition compounds. Four formulas get you there; only the last has a clock in it.

Run one business through all four. $50,000 of sales & marketing spend acquires 250 customers, so CAC = $200.

A $50 ARPU customer at a 70% gross margin generates $35 of monthly gross profit; at 5% monthly churn the average lifetime is 20 months, so gross-profit LTV = 50 × 0.70 × 20 = $700 (the revenue-only figure would overstate this at $1,000).

Ratio = 700 ÷ 200 = 3.5 : 1 — generally healthy. Payback = 200 ÷ 35 ≈ 5.7 months, and net LTV after CAC is $500. At a 3 : 1 target ratio the maximum sustainable CAC is $233 — that, not the $200 you pay today, is the number you can bid to.

Flat 5% churn books gross profit a real cohort never earns

Average lifetime = 1 ÷ monthly churn rate, so at 5% monthly churn the average customer stays 20 months. That is a geometric-survival average — many customers leave much earlier, a few stay much longer — and the engine assumes the rate holds, so survival decays at a constant 5% a month. If churn is 0, or your cohorts are too young to measure it, use a manual lifetime estimate instead; the SaaS mode supports both, and that option exists precisely for when the rate does not hold. Real cohorts churn hard early and slowly later; the curve below is an illustrative shape, not measured data.

Over 24 months the flat model books $495.61 of gross profit per customer against the cohort curve's $465.97 — a $29.64 gap, 6% overstated, even though cohort survival overtakes the flat curve from month 17.

A gap that size is why LTV is a forecast wearing a formula: churn drift, pricing changes and cohort mix all move it. Re-estimate from your own cohorts regularly rather than letting one measured rate stand in for the next twenty months.

One customer, four defensible LTVs, and the ratio each one lets you quote

One SaaS customer, one $800 CAC, four defensible LTV figures. The ratio you quote depends on which you picked, and the spread is wider than most decision margins.

Quote the gross-profit row. Revenue LTV ignores what it costs to serve a customer, so a healthy-looking 3 : 1 revenue ratio can be closer to 1 : 1 once margin is applied. Then read the bottom row beside it: the ratio (LTV ÷ CAC) shows efficiency, how many dollars of value each acquisition dollar returns, while net LTV (LTV − CAC) shows the actual dollar profit per customer. A high ratio with a small net LTV means acquisition is efficient but the absolute dollars are thin — check both before deciding a channel is worth scaling. The expansion and contraction adjustment behind all four figures is static, ARPU × (1 + e − c), deliberately more conservative than compounding net revenue retention.

A 5 : 1 ratio with a 20-month payback is a cash problem

Same $35 of monthly gross profit, five acquisition costs. The ratio and the payback move together here, but only one of them tells you when the cash comes back.

A ratio can look strong while the bank balance does not, because the ratio has no clock. A 5 : 1 ratio with a 20-month payback locks up acquisition cash for 20 months per customer before that customer turns profitable, and scaling it makes the locked-up balance grow faster than the profit. A 4 : 1 ratio paying back in 4 months and a 4 : 1 ratio paying back in 22 are different businesses. Read the payback timeline in the tool against your runway before raising budgets. One caveat the arithmetic cannot see: payback assumes the customer survives the whole payback window, so the calculator flags the case where the average customer churns first.

The same 3.00 : 1, paid back in 4 months and in 27

Two businesses, both at exactly 3.00 : 1, with completely different funding needs.

The ratio is a profitability statement with no clock in it; payback is the clock. Business B has to finance every customer it acquires for more than two years before the cash comes back.

The folk benchmark behind both rows is 3 : 1 or better with payback under roughly 12 months, and the calculator bands to match: below 1 losing money, 1–2 weak, 2–3 thin, 3–5 generally healthy, above 5 very efficient — at which point check the CAC is fully loaded and that you are not under-investing in growth. The honest answer depends on gross margin, cash position and growth stage. No threshold here is an industry standard: every one is a planning band, and your margin structure decides what “good” means.

The two organic channels that make paid acquisition look solvent

The two organic channels cost $25.00 and $55.56 a customer and drag the average down, which makes paid acquisition look solvent when one paid channel is not.

Blended CAC is $140.54 at 5.90 : 1; the paid channels alone cost $191.67 and return 4.52 : 1, with Meta Ads at 1.70 : 1 buried inside both averages.

So segment rather than reading the blend: switch to Channels mode and price each source separately, because cheap organic customers hide an expensive paid channel inside a comfortable-looking average. Getting a channel’s CAC right means dividing fully loaded sales and marketing spend by the new customers acquired in the same period — fully loaded meaning ads, salaries and commissions, tools, agencies, creative, and acquisition discounts, since CAC is only as honest as what you are willing to put in the numerator. If customers take months to convert on a long sales cycle, align the spend window with the cohort it actually produced. Then treat every channel figure as provisional: attribution is imperfect, and channel-level CAC inherits every attribution problem your analytics has.

The most you can pay for a customer at each target ratio

The ratio ceiling and the payback ceiling are different numbers. The lower one is the number you can actually bid to.

Where each of the four modes stops being trustworthy

Simple, SaaS, Ecommerce and Channels are four independent models that share identities, not one merged dataset: each exports its own inputs to the workbook, and a figure entered in one does not travel to another. Each carries its own limitation, and knowing where a mode stops keeps its output a planning number rather than a forecast.

• Simple and SaaS rest entirely on churn — lifetime is the geometric-survival average 1 ÷ churn — so both inherit the flat-survival overstatement measured above.
• SaaS expansion and contraction move ARPU once and statically rather than compounding, which understates a genuinely expanding account and overstates a shrinking one.
• Ecommerce treats refunds as removing the full margin of refunded orders, while fees, shipping and discounts are still paid on every order shipped.
• Channels divides spend by customers per source; it is not an incrementality test and cannot tell you which of those customers you would have won anyway.
• All four clamp percentages to 0–100 and render impossible quantities as “Not possible” or “Not meaningful”, never as infinity.

This is a planning estimate, not bookkeeping. It does not replace your accounting records, your CRM, or professional advice, and it cannot tell you how a customer you have not acquired yet will behave. For ad-spend profitability floors see the break-even ROAS calculator; for the full order-level cost stack see the ecommerce profit calculator; for volume break-even see the break-even calculator.

Related calculators

This page answers “is acquisition worth it?” — these tools take the neighbouring questions:

More in Business, or browse all calculators.

Read the guides

There is no dedicated LTV:CAC guide yet. For the ecommerce cost-stack math that feeds this calculator's Ecommerce/DTC mode — fees, shipping, ads, and returns — see Ecommerce Profit: Fees, Shipping, Ads, Returns, and Real Margin.

If ad spend is what's driving acquisition cost, see Break-Even ROAS Explained for Small Business Advertising.

Sources and methodology

Everything here is arithmetic on the figures you enter. The calculator does not read your billing system, your CRM or your ad accounts, and it fetches no benchmarks.

This page needs one honest warning more than it needs citations. LTV, CAC and the LTV:CAC ratio are not defined by any accounting standard, regulator or standards body. They are management metrics that each company defines for itself, which is precisely the point the SEC guidance below makes about metrics of this kind. The 3:1 target in particular is a venture-capital rule of thumb, not a rule: we could find no issuing authority for it, and we will not invent one. Treat it as a conversation about payback, margin and funding, not a threshold you pass or fail.

What is citable is the machinery underneath: the geometric-series identity that turns a churn rate into an average lifetime, the margin definitions that make gross-profit LTV the honest version, the cost discipline behind a fully loaded CAC, and the attribution mechanics that make channel-level CAC unreliable. Links open in a new tab.

• Commission Guidance on Management Discussion and Analysis, Release Nos. 33-10751 and 34-88094 - the regulator statement that company-reported metrics of this kind vary significantly from company to company and must be defined by the company presenting them, which is exactly why no LTV or CAC figure here can be checked against a standard definitionU.S. Securities and Exchange Commission, via GovInfo (U.S. GPO) · verified 2026-09-01
• Calculus Volume 2, Infinite Series - the geometric series sum that makes average customer lifetime equal 1 divided by the churn rate, the single substitution the flat-churn LTV on this page rests onOpenStax (Rice University) · verified 2026-09-01
• Cost-volume-profit analysis - the contribution and gross margin definitions behind using gross-profit LTV rather than revenue LTV, the distinction that separates a real 3:1 from a flattering oneAssociation of Chartered Certified Accountants (ACCA) · verified 2026-09-01
• Plan your business: calculate your startup costs - the cost-accounting discipline behind a fully loaded CAC, where salaries, tools, agencies and creative belong in the numerator and not just media spendU.S. Small Business Administration · verified 2026-09-01
• About attribution models - how an ad platform assigns credit for a conversion, which is the mechanism behind the limitation on this page that channel-level CAC inherits every attribution problem your analytics hasGoogle Ads Help (Google LLC) · verified 2026-09-01