Free Tool

LTV:CAC & payback calculator

How much is a customer really worth, and how much can you afford to pay for one? Works for subscription businesses and for anyone whose customers buy more than once.

Subscription Repeat purchase

Currency

1 · Customer value

Revenue per customer / month

Monthly churn (%)

Customers lost each month.

Gross margin (%)

After cost of goods or service.

2 · Acquisition cost

CAC per customer

…or marketing spend

…and new customers

Target LTV:CAC

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LTV:CAC ratio

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Lifetime value (profit): —
CAC: —
Payback period: —
Customer lifetime: —

Max CAC at your target ratio

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How to use the LTV:CAC calculator

Return on ad spend tells you whether a campaign pays back on the first order. LTV:CAC tells you whether your business can afford its growth, by comparing what a customer is worth over their whole relationship with you to what it costs to win them.

Choose your model

Subscription: SaaS, memberships, retainers and subscription boxes. Enter average monthly revenue per customer and monthly churn.
Repeat purchase: ecommerce, salons, trades with repeat work. Enter average order value, how often customers buy each year, and how many years they stay.

Read the results

LTV is lifetime gross profit, not revenue, so it reflects what you can actually spend.
LTV:CAC around 3:1 or more is generally considered healthy.
Payback period is how many months of gross profit it takes to recover CAC. Under 12 months is comfortable for most businesses.
Max CAC is the most you can pay per customer while still hitting your target ratio. Use it as a ceiling for campaign CPA targets.

The formulas

Subscription LTV = monthly revenue × gross margin ÷ monthly churn
Repeat-purchase LTV = order value × orders per year × years × gross margin
Payback (months) = CAC ÷ monthly gross profit per customer

FAQ

LTV:CAC questions

Can't find what you need? Ask us directly.

What is LTV?

LTV (customer lifetime value) is the total gross profit you earn from an average customer over the whole time they buy from you. This calculator uses gross profit rather than revenue, because that's the money actually available to pay for acquisition.

What is CAC?

CAC (customer acquisition cost) is what you spend to win one new customer: total marketing and ad spend ÷ new customers acquired. If you don't know it, enter your spend and new customer count and the calculator works it out.

What is a good LTV:CAC ratio?

A ratio of 3:1 (you earn three times what you spend to acquire a customer) is the commonly used benchmark for a healthy business. Below 1:1 you lose money on every customer. Well above 5:1 can mean you're under-investing in growth and could afford to acquire customers faster.

What is the CAC payback period?

The number of months it takes for a customer's gross profit to cover what you paid to acquire them. Shorter is better for cash flow: a 3:1 ratio isn't much help if it takes three years to get your money back.

How do I calculate customer lifetime from churn?

For subscriptions, average customer lifetime in months ≈ 1 ÷ monthly churn rate. 5% monthly churn means customers stay about 20 months on average.