LTV and CAC Calculator
Calculate customer lifetime value from ARPU, gross margin and churn, and compare it with your customer acquisition cost to get the LTV:CAC ratio and payback period.
Calculate customer lifetime value from ARPU, gross margin and churn, and compare it with your customer acquisition cost to get the LTV:CAC ratio and payback period.
Customer lifetime value (LTV) is how much gross profit an average customer brings over their time with you. Customer acquisition cost (CAC) is what you spend to win them. Comparing the two shows whether growth is sustainable.
Enter revenue per customer, gross margin, monthly churn and CAC to get LTV, the LTV:CAC ratio and how many months it takes to earn back CAC.
Customer lifetime = 1 / monthly churn LTV = ARPU x gross margin x lifetime Payback = CAC / (ARPU x gross margin)
This tool estimates lifetime from churn: lifetime in months equals 100 divided by the monthly churn percentage. LTV is monthly revenue per customer times gross margin times that lifetime. Example: revenue of 1,000 a month, 70 percent margin and 5 percent churn gives gross profit of 700 a month, a 20 month lifetime and an LTV of 14,000. With a CAC of 4,000 the LTV to CAC ratio is 3.5 to 1, and CAC payback is 4,000 divided by 700, about 5.7 months.
The model has limits worth knowing. It assumes a constant churn rate, while real churn is usually higher in the first months and lower later, so the single average can mislead. It ignores discounting, expansion revenue, upgrades and support costs beyond the margin you enter. Very low churn produces extreme lifetimes, for example 0.5 percent churn implies about 200 months, which is not a reliable forecast. Use measured churn from a recent cohort, and consider capping lifetime at a few years for a more cautious estimate.
A common rule of thumb is 3:1 or higher, but it varies by business and stage.
As one divided by monthly churn. At 5% churn the average customer stays about 20 months.
Roughly, if you treat churn as the share of customers who do not buy again each month. For one-off sales, a cohort analysis is better.
No. It stays in your browser.
Monthly. The formula expects the percentage of customers lost each month. If you only know annual churn, divide roughly by twelve for a rough estimate, or recalculate from monthly cohort data.
Zero churn would mean an infinite lifetime, so the tool cannot give a meaningful LTV. Enter a small realistic churn figure based on your longest observed cohort instead.