Customer LTV & CAC Calculator United States

What the customer LTV and CAC calculator does

This calculator estimates the lifetime value of a customer (LTV) and compares it with the cost of acquiring them (CAC), for any subscription or repeat-purchase business. It multiplies average revenue per period by gross margin and by expected customer lifespan to get LTV, then divides LTV by CAC for the LTV:CAC ratio. It also shows the CAC payback period, the net value per customer, and total lifetime revenue before margin.

These figures describe your unit economics: whether each customer you win adds more value than it costs to win them. A business can grow quickly and still lose money if it spends more to acquire customers than they ever return.

Why LTV and CAC matter together

A high LTV only helps if acquisition costs are proportionate, and a low CAC only helps if those customers stay and spend. The ratio tells you whether growth is creating or destroying value.

Investors, founders and marketing teams use the ratio as a one-number summary of acquisition efficiency. A common rule of thumb is that around 3:1 is healthy, leaving room for overhead and profit after the direct cost of the sale. Close to 1:1 means you barely break even on acquisition, while a very high ratio can mean you are under-spending on marketing and sales and missing growth.

How the calculation works

• It multiplies average revenue per period by gross margin to find the margin each customer contributes per period.
• It multiplies that margin by the customer lifespan to get lifetime value.
• It divides lifetime value by acquisition cost for the LTV:CAC ratio.
• It divides acquisition cost by the per-period margin for CAC payback in periods.

Lifetime value is based on margin, not revenue, so it reflects profit contribution. The total lifetime revenue output shows the pre-margin figure if you want it.

Choosing your inputs

Average revenue per period should be what a typical customer pays over a consistent interval, usually a month. Gross margin should be your true margin after the direct costs of serving the customer, such as hosting, support, payment processing or cost of goods.

Lifespan is often the hardest input. If you track churn, enter your monthly churn rate and the tool uses one divided by that rate, the standard approximation: 4% monthly churn implies about 25 months. If you have an observed figure from cohort data, enter the lifespan directly.

Acquisition cost should be fully loaded: advertising, sales salaries and commissions, tooling and onboarding spend, divided by the number of customers acquired in the same period.

Reading your result

A ratio at or above 3:1 with a short payback period generally points to efficient acquisition. A weak ratio or long payback suggests improving retention and margin, lowering acquisition cost, or both, before spending more on growth. Net value, LTV minus CAC, is the profit each customer contributes after the cost of winning them; track it over time to see whether changes to pricing, retention or acquisition are working.

Use the calculator when planning a marketing budget, evaluating a new channel, preparing figures for investors or testing a pricing change. Small changes in churn or margin move lifetime value a lot, so recalculate when they change.

Common pitfalls to avoid

Using revenue instead of gross margin inflates lifetime value and the ratio. Understating churn, or measuring it over too short a window, stretches the implied lifespan. Leaving sales salaries or tooling out of acquisition cost makes CAC look too low. Keep the revenue period and lifespan period consistent, because monthly revenue with a lifespan in years is off by a factor of twelve. And look at the ratio by cohort and over time: a single blended figure hides whether newer customers are more or less valuable than older ones.

This is general information only and not financial advice.

About This LTV CAC Calculator

Use this LTV CAC calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.