LTV:CAC calculator. How many times does a customer pay back their cost?
Type in monthly revenue per customer, your margin, churn and acquisition spend; LTV, CAC and the ratio are calculated as you type.
3.33x
A customer brings 3.3 times their acquisition cost in gross profit; the cost pays back in 6 months.
- LTV (customer lifetime value)
- $16,000
- CAC (customer acquisition cost)
- $4,800
- CAC payback period
- 6 months
Free · no sign-up · runs in your browser · Last updated: 17 October 2026View as Markdown
How it’s calculated
A customer’s value, against the cost to win them.
- LTV = (Monthly revenue × Gross margin) ÷ Monthly churn
- CAC = Acquisition spend ÷ New customers
- LTV:CAC = LTV ÷ CAC
- Payback = CAC ÷ (Monthly revenue × Gross margin)
- Average lifetime = 1 ÷ Monthly churn
LTV (customer lifetime value) is the gross profit a customer brings over the time they stay with you; CAC (customer acquisition cost) is what it costs to win a new customer. The LTV:CAC ratio shows how many times each customer pays back the cost of acquiring them.
Below 1, every new customer costs more than they bring. A rule of thumb often quoted in SaaS is 3:1 (David Skok, "SaaS Metrics 2.0"): a ratio at that level is read as a sign of healthy acquisition spend.
The payback period shows cash flow: even with a good ratio, growth needs cash if it takes long to earn the CAC back.
A small improvement in churn changes LTV a lot: cutting monthly churn from 5% to 4% lifts the average lifetime from 20 to 25 months.
Limits
- It assumes constant monthly revenue and constant churn; in reality both vary by customer group and over time.
- Future profit is not discounted to today's value; with long lifetimes LTV is optimistic.
- If the sales team's cost is left out of CAC, the ratio looks better than it is.
Frequently asked questions
What is a good LTV:CAC ratio?
Copy linkA rule of thumb often quoted in SaaS is 3:1 (David Skok, "SaaS Metrics 2.0"). Below 1, acquiring customers loses money; far above, you may be spending too little to grow.
How do you calculate LTV?
Copy linkMultiply the monthly revenue per customer by the gross margin and divide by the monthly churn rate. That gives the gross profit a customer brings over their average lifetime.
What should CAC include?
Copy linkAll marketing and sales spend to win new customers: ads, agency, tools and the sales team's cost. Counting ad spend alone makes CAC look lower than it is.
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