Free tool

CAC + LTV calculator.

Calculate your true customer acquisition cost, customer lifetime value, payback period, and LTV:CAC ratio. The metrics that determine whether your marketing program is sustainable.

What is CAC and LTV? CAC (Customer Acquisition Cost) is what you spend in marketing and sales to acquire one new customer. LTV (Customer Lifetime Value) is the total gross profit a customer produces over their full relationship with you. The ratio between them (LTV:CAC) is one of the cleanest measures of a business's unit economics. A healthy LTV:CAC is 3:1 or higher; below 1:1 means you lose money on every customer.

Your numbers

Total marketing spend per month ($) Ad spend + agency / freelance fees + content + tools. Everything that gets a new customer in the door.

Sales spend per month ($) — optional Sales team salaries + commissions + CRM costs. Only fill in if you have a sales team.

New customers acquired per month

Average revenue per customer per month ($) Recurring revenue (subscription) or annualized average for one-time / repeat purchases.

Gross profit margin (%) Percentage of revenue you keep after cost of goods or service delivery.

Average customer lifetime (months) How long, on average, a customer stays a customer. SaaS: 12-60 months. Service: 6-36 months. Retail: variable.

Results

CAC (Customer Acquisition Cost) — (Marketing + sales spend) ÷ new customers acquired.

LTV (Customer Lifetime Value) — Avg revenue × margin × retention months. Gross-profit LTV, not revenue LTV.

LTV:CAC ratio — Healthy: 3:1 or higher. Marginal: 1:1 - 3:1. Unsustainable: under 1:1.

CAC payback period — How many months until a new customer pays back their acquisition cost. Healthy: under 12 months.

Enter your numbers to see your unit economics analysis.

What healthy LTV:CAC looks like.

LTV:CAC above 3:1: healthy. You can comfortably increase marketing spend to acquire more customers. The unit economics support scale.
LTV:CAC 1:1 to 3:1: marginal. You are profitable, but the margin for error is thin. Customer retention drops or CPCs rise, and you slip below 1:1 quickly. Focus on either reducing CAC or improving LTV before scaling.
LTV:CAC under 1:1: unsustainable. Every new customer loses money on a gross-margin basis. Either the marketing is too expensive, the retention is too low, or the price is too low. All three are fixable, but scaling spend without fixing the underlying issue makes the losses worse.

The most common reason a business has poor LTV:CAC is not high CAC; it is short retention. A customer who stays 12 months is worth half what a customer who stays 24 months is. Customer success and retention investment usually has higher ROI than acquisition investment at the margin.

What the CAC payback period tells you.

Payback period is how long it takes a new customer to pay back the cost you spent acquiring them. It is a cash-flow metric, separate from the LTV:CAC unit-economics metric.

Under 6 months: excellent. Marketing spend recycles fast; cash flow stays healthy even at high growth rates.
6-12 months: healthy for most categories. Subscription businesses, professional services, B2B SaaS all typically operate in this range.
12-24 months: requires careful cash management. High-LTV businesses can tolerate it but only with sufficient runway or financing to bridge the gap.
Over 24 months: unusual outside of large enterprise sales. If your category requires 2+ year payback, you need substantial capital reserves to scale without running out of cash.

Need a unit-economics audit?

If your numbers above point to structural issues, we can audit the marketing program and tell you what is driving the gap.

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