Home › Business › LTV to CAC Calculator

Customer Lifetime Value (LTV) and CAC Calculator

Enter what it costs to win a customer, what they pay each month, your gross margin and monthly churn. Healthy subscription businesses often aim for LTV:CAC of 3 or more.

$
$
%
%

LTV : CAC ratio

—

Lifetime value (gross profit)
—
Average customer lifetime
—
CAC payback period
—

Tips for using the ltv to cac calculator

  • Small churn changes have big effects: cutting churn from 5% to 4% raises LTV by 25%.
  • Calculate CAC by channel to see which marketing pays off.
  • Use cohort data once you have it; early churn is often higher than later churn.

How the ltv to cac calculator works

Lifetime value estimates the gross profit a customer brings in before they leave. With a steady monthly churn rate, the average customer stays 1 ÷ churn months.

Average lifetime = 1 ÷ monthly churn
LTV = Revenue per month × Gross margin ÷ Monthly churn
CAC payback = CAC ÷ (Revenue per month × Gross margin)

Using gross margin rather than revenue keeps LTV honest, since serving each customer has costs. CAC should include all sales and marketing spend for a period divided by new customers won in that period. A ratio of 3:1 is a common benchmark for venture-backed SaaS companies, and payback within 12 months is generally considered healthy. Expansion revenue and discounting future cash flows are not included.

Worked example

A customer pays $50 a month at an 80% gross margin, giving $40 of gross profit a month. With 5% monthly churn the average customer stays 20 months, so LTV = $40 × 20 = $800. At a $200 CAC the ratio is 4 : 1 and CAC is paid back in 5 months.

Frequently asked questions

What is a good LTV to CAC ratio?

Around 3:1 is the common benchmark. Much higher can mean you are underinvesting in growth; under 1:1 loses money on each customer.

How do I calculate churn rate?

Customers lost during a month divided by customers at the start of that month.

Should LTV use revenue or profit?

Gross profit is more accurate, because it accounts for the cost of serving each customer.

What is CAC payback?

The months of gross profit needed to recover the cost of acquiring a customer.

Updated October 2026. Results are estimates for education, not financial or medical advice. All math runs in your browser; nothing you type is sent anywhere.

Related calculators