CAC / LTV Calculator

Enter your acquisition spend, new customers, revenue per customer, and retention assumptions to see key subscription-business metrics.

Total sales and marketing spend in the period.
Number of new customers acquired in the period.
Average monthly revenue per customer.
How long a customer stays on average.
Percentage of revenue remaining after cost of goods sold.

LTV:CAC ratio

6.7

Customer Acquisition Cost$250
Lifetime Value$1,680
CAC payback (months)3.6
Formula Formula Assumptions 3 Example Example Last updated Mar 11, 2026
Inputs stay in the browser unless a future feature explicitly tells you otherwise. Use this as an estimate and validate important decisions with a qualified professional.

How to use this CAC/LTV calculator

  1. Enter marketing spend

    Type the total sales and marketing spend for the period in the Marketing spend field.

  2. Enter new customers

    Type the number of new customers acquired during that period in the New customers acquired field.

  3. Set average revenue

    Enter the average monthly revenue per customer in the Avg revenue per customer/month field.

  4. Estimate customer lifetime

    Enter the average number of months a customer stays active in the Avg customer lifetime (months) field.

  5. Add gross margin

    Enter your gross margin percentage in the Gross margin % field so the calculator can factor in cost of goods sold when computing lifetime value.

Methodology

How this CAC/LTV calculator works

CAC is total sales and marketing spend divided by new customers. LTV is average revenue per customer multiplied by lifetime and gross margin. The LTV:CAC ratio indicates how efficiently you're acquiring customers, while CAC payback estimates how many months of gross profit it takes to recover acquisition cost.

Formula
CAC = sales and marketing spend / customers; LTV = ARPU × lifetime × (gross margin % ÷ 100); LTV:CAC = LTV / CAC; CAC payback (months) = CAC ÷ (ARPU × gross margin % ÷ 100)
CAC Customer Acquisition Cost — what it costs to acquire one customer
LTV Lifetime Value — total gross profit from a customer over their lifetime
payback Months to recover the acquisition cost from a single customer
Example

Spend $50,000 to acquire 200 customers, each paying $100 per month for 24 months at 70% gross margin: CAC = $250, LTV = $1,680, ratio = 6.7:1, and payback is about 3.6 months.

With the same $50,000 sales and marketing budget but only half the customers acquired — half of 200 — CAC doubles well above $250, which compresses the LTV:CAC ratio below 6.7:1 even though each customer still generates $1,680 in lifetime value. This scenario illustrates why conversion-rate improvements are often more cost-effective than simply increasing ad spend.

Keeping acquisition metrics steady at $250 CAC and 200 customers, but extending the average customer lifetime beyond 24 months while maintaining 70% gross margin raises LTV above $1,680 and improves the ratio beyond 6.7:1. Investing in retention — better onboarding, proactive support, and product improvements — is one of the most capital-efficient ways to improve unit economics without increasing marketing spend.

Assumptions
  • ✓ All customers have the same average revenue and lifetime.
  • ✓ The spend figure should include the full sales and marketing cost you want CAC to reflect.
  • ✓ Gross margin is applied uniformly.
Notes
  • A ratio below 1:1 means the simplified lifetime gross profit estimate is lower than acquisition cost. Around 3:1 is often cited as a SaaS benchmark, not a universal rule.

What are CAC and LTV?

Customer Acquisition Cost (CAC) measures how much you spend to win a single new customer. It is calculated by dividing total sales and marketing expenditure by the number of new customers acquired in the same period. Lifetime Value (LTV) estimates the total gross profit a customer generates over the entire relationship. It multiplies average revenue per period by the expected customer lifetime and adjusts for gross margin so that only the profit portion is counted. Together, these two metrics form the foundation of unit economics — the per-customer view of whether a business model is financially viable. A business where LTV comfortably exceeds CAC can afford to invest in growth, while one where CAC approaches or exceeds LTV is effectively paying more to acquire customers than it earns from them. Tracking both metrics over time helps identify trends in marketing efficiency and customer quality.

Using the LTV:CAC ratio to guide spending

The LTV:CAC ratio is a single number that summarizes how efficiently acquisition spend converts into long-term profit. A ratio near 3:1 is often used as a SaaS benchmark: each customer returns about three times what it cost to acquire them, leaving room for operating expenses and profit. Ratios below that benchmark may suggest either acquisition costs are too high or customer retention and revenue need improvement, but the right target depends on market, margin, growth stage, and payback expectations. Ratios above 5:1 can sometimes signal under-investment — the business may be leaving growth on the table by not spending enough on marketing. The CAC payback period adds another dimension: it measures how many months of gross profit it takes to recover the acquisition cost. A shorter payback means the business recycles capital faster and is less exposed to churn risk. Investors look at both the ratio and the payback period together to assess the sustainability and scalability of the growth model.

Frequently asked questions

What is a good LTV:CAC ratio?

Around 3:1 is a common SaaS benchmark, but it is not a law. The right target depends on gross margin, payback period, churn, growth stage, and how much capital the business can recycle into acquisition.

Should I include salaries in CAC?

Yes. CAC should include all sales and marketing costs — ad spend, salaries, tools, and commissions.

Written by Jan Křenek Founder and lead developer
Reviewed by DigitSum Methodology Review Formula verification and QA
Last updated Mar 11, 2026

Use this as an estimate and validate important decisions with a qualified professional.

Inputs stay in the browser unless a future feature explicitly tells you otherwise.