LTV:CAC Calculator
Calculate customer lifetime value, acquisition cost, and the LTV:CAC ratio.
Inputs
$
%
%
$
Results
LTV:CAC Ratio
12.0:1
Customer LTV
$1,200.00
CAC
$100.00
Payback Period
5.0 months
Healthy — LTV:CAC ratio of 3:1 or higher suggests efficient customer acquisition.
Formula
LTV = (AOV × Frequency × Gross Margin%) / Churn Rate\nCAC = Marketing Spend / New Customers\nRatio = LTV / CAC
LTV estimates the total gross profit from a customer over their lifetime. CAC is the average cost to acquire one customer. The ratio shows how efficiently you acquire customers.
Worked Example
AOV: $100 | Frequency: 4x/year | Margin: 60% | Churn: 20%
Marketing: $10,000 | New Customers: 100
LTV = (100 × 4 × 0.60) / 0.20 = $1,200
CAC = $10,000 / 100 = $100
LTV:CAC = 12:1 (Healthy)
When to Use This Calculator
Use to evaluate customer acquisition efficiency for subscription businesses, SaaS, e-commerce, or any business with repeat purchases.
Important Assumptions
- AOV, frequency, and margin are averages.
- Churn is annual.
- All marketing spend is for acquisition.
Common Mistakes to Avoid
- Using revenue instead of gross profit for LTV.
- Not including all acquisition costs in CAC.
- Ignoring that LTV assumptions change over time.
Frequently Asked Questions
What is a good LTV:CAC ratio?
A ratio of 3:1 or higher is generally considered healthy. Below 1:1 means you spend more to acquire customers than they generate in profit.
What is payback period?
How many months it takes for a customer to generate enough gross profit to cover their acquisition cost.
Related Calculators
Methodology: This calculator uses standard financial formulas documented above. All calculation engines are unit-tested for accuracy.View full methodology
Disclaimer: This calculator provides estimates for educational purposes only. Results do not constitute financial advice.Full disclaimer