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CAC and LTV Calculator

Computes customer acquisition cost from marketing spend and new customers, customer lifetime value from monthly revenue per customer, gross margin and monthly churn (lifetime = 1 / churn), plus the LTV:CAC ratio and CAC payback period in months.

When to use

You need SaaS or subscription unit economics: how much a customer costs to acquire, what they are worth over their lifetime, and how the two compare.

Do not use when: Customers buy once rather than recur (LTV then equals margin per order × repeat purchases) or you only need the churn rate itself (use churn-rate).

Formula

CAC = marketing_spend / new_customers; lifetime_months = 100 / monthly_churn_percent; LTV = monthly_revenue_per_customer × gross_margin_percent/100 × lifetime_months; ratio = LTV / CAC; payback_months = CAC / (monthly_revenue_per_customer × gross_margin_percent/100)

Simple (undiscounted) LTV with constant churn and revenue; the 1/churn lifetime is the expected lifetime of a geometric survival process. Discounting future margin or including expansion revenue would change the value.

Inputs

ParameterTypeUnitRequiredDescription
marketing_spendnumberyesTotal acquisition spend in the period (ads, sales salaries, tools). Range: ≥ 0, ≤ 1000000000000
new_customersintegeryesCustomers won in the same period. Range: > 0, ≤ 1000000000
monthly_revenue_per_customernumberyesAverage revenue per customer per month (ARPU / ARPA). Range: > 0, ≤ 1000000000
gross_margin_percentnumber%default 100Gross margin on that revenue. Use 100 for a revenue-based LTV. Range: > 0, ≤ 100
monthly_churn_percentnumber%yesShare of customers lost per month; lifetime = 1 / churn. Range: > 0, ≤ 100

Outputs

OutputTypeUnitDescription
cacnumbermarketing_spend / new_customers.
monthly_gross_profit_per_customernumbermonthly_revenue_per_customer × gross_margin.
customer_lifetime_monthsnumbermonths1 / (monthly_churn_percent / 100).
ltvnumbermonthly gross profit per customer × customer lifetime.
ltv_to_cac_rationumberltv / cac; 3 or more is the usual benchmark for a healthy subscription business.
cac_payback_monthsnumbermonthscac / monthly gross profit per customer.
assessmentstringComparison of the ratio with the common 3:1 benchmark.

Example

Spend 10,000 / 100 customers, ARPU 50, 80 % margin, 5 % churn: {"marketing_spend":10000,"new_customers":100,"monthly_revenue_per_customer":50,"gross_margin_percent":80,"monthly_churn_percent":5} → {"cac":100,"monthly_gross_profit_per_customer":40,"customer_lifetime_months":20,"ltv":800,"ltv_to_cac_ratio":8,"cac_payback_months":2.5}

Spend 60,000 / 150 customers, ARPU 30, 70 % margin, 4 % churn: {"marketing_spend":60000,"new_customers":150,"monthly_revenue_per_customer":30,"gross_margin_percent":70,"monthly_churn_percent":4} → {"cac":400,"customer_lifetime_months":25,"ltv":525,"ltv_to_cac_ratio":1.31,"cac_payback_months":19.05}

GET https://tttkmbb.com/api/v1/calculate/cac-ltv?marketing_spend=10000&new_customers=100&monthly_revenue_per_customer=50&gross_margin_percent=80&monthly_churn_percent=5

Machine access

Sources

FAQ

Why is lifetime 1 / churn?

If 5 % of customers leave every month, the expected time a customer stays is 1 / 0.05 = 20 months. This assumes churn is constant over time.

Should LTV use revenue or gross margin?

Gross margin, because only margin can repay acquisition cost. Revenue-based LTV (gross_margin_percent = 100) overstates value for low-margin businesses.

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