CAC & LTV Calculator
Calculate customer acquisition cost, lifetime value, and the all-important LTV:CAC ratio.
Published by Blueprint Dynamics. Planning tools, not professional advice. Read the formula, assumptions, and examples below before relying on a result. Independent professional review is not claimed. Learn more about our methodology →
AllTemplates • Blueprint Dynamics • hello@bpdynamics.io. Educational worksheet; entries and assumptions are not independently verified. This document is not tax, legal, medical, investment or engineering approval. Review current official rules and seek a qualified specialist where appropriate.
Scope and reference context
Use consistent cohorts and attribution windows. LTV and significance depend on assumptions; a normal-approximation A/B screen is not a sequential test or a guarantee of future performance.
Primary reading context, not an endorsement or evidence that the linked organization reviewed this tool. No independent professional sign-off is claimed.
About the CAC & LTV Calculator
Customer acquisition cost (CAC) and lifetime value (LTV) are the two numbers that decide whether a growth engine is worth feeding. CAC tells you what it takes to win one new customer once every sales salary, ad dollar, agency retainer, and tool subscription is counted. LTV estimates the gross profit that same customer will generate before they churn. Looked at alone, either number can mislead you; a low CAC feels great until you learn those customers cancel in two months, and a high LTV means nothing if you overspend to land it.
This calculator brings both sides onto one screen and reduces them to a single ratio investors and operators watch closely: LTV divided by CAC. Subscription businesses, DTC brands, and agencies all use it to sanity-check paid channels before scaling budget. It also surfaces a payback figure — how many months of margin it takes to earn back what you spent acquiring the customer — which matters enormously for cash flow when you are funding growth out of revenue rather than a war chest.
How the CAC & LTV Calculator works
You enter total sales and marketing spend for a period, the number of new customers that spend produced, average revenue per customer per month (ARPU), gross margin, and average customer lifespan in months. CAC is simply spend divided by new customers. LTV multiplies ARPU by your gross margin (as a decimal) by lifespan, so it reflects profit rather than top-line revenue — a crucial distinction most back-of-napkin estimates skip.
The headline LTV:CAC ratio is LTV divided by CAC. A widely cited benchmark is 3:1 or better: you want at least three dollars of lifetime gross profit for every dollar spent acquiring the customer. Below 1:1 you lose money on every sale. The tool also computes months to recover CAC as CAC divided by monthly margin (ARPU times margin), which tells you how long each customer must stay before they turn profitable.
Worked example
Suppose you spent $50,000 on sales and marketing last quarter and closed 250 new customers. CAC works out to $50,000 / 250 = $200 per customer. Each customer pays $60 a month, you keep 75% as gross margin, and they stay for 24 months on average. LTV is $60 × 0.75 × 24 = $1,080.
The ratio is $1,080 / $200 = 5.4:1, comfortably above the 3:1 target, which signals you likely have room to spend more aggressively. Payback is $200 / ($60 × 0.75) = $200 / $45 = about 4.4 months, meaning each customer covers their acquisition cost early in their second quarter and everything after is profit.
Tips & common mistakes
- Put fully loaded costs into spend — salaries of the sales and marketing team, ad platform fees, creative production, and software — not just media spend, or your CAC will look artificially low.
- Use gross margin, not revenue, in LTV. Counting the full $60 as value when your margin is 75% overstates lifetime value by a third and can justify overspending.
- Estimate lifespan from real churn: average lifespan in months is roughly 1 divided by your monthly churn rate, so 4% monthly churn implies about a 25-month lifespan.
- Watch payback separately from the ratio. A 5:1 ratio with an 18-month payback can still starve you of cash if you grow quickly and revenue arrives slowly.
- Segment before you act. Blended CAC hides that one channel might run 8:1 while another loses money; calculate per channel to reallocate budget.
CAC & LTV Calculator: frequently asked questions
Should LTV use revenue or gross profit?
Gross profit. Value should reflect what actually drops toward the bottom line after cost of goods and service delivery. This calculator multiplies ARPU by your gross margin precisely so the resulting LTV is comparable to the real dollars you spent on acquisition.
What is a good LTV:CAC ratio?
Around 3:1 is the common benchmark for a sustainable business. Much lower and unit economics are shaky; much higher (say 6:1 or more) often means you are underinvesting in growth and leaving market share on the table rather than being efficient.
How do I estimate average customer lifespan?
If you know your monthly churn rate, lifespan in months is approximately 1 divided by that rate. At 5% monthly churn, expected lifespan is about 20 months. For contract businesses, use historical retention curves rather than a single churn snapshot.
Why does months-to-recover CAC matter if the ratio is healthy?
The ratio measures lifetime profitability, but payback measures cash timing. A long payback ties up working capital, so fast-growing companies can be profitable on paper yet run short of cash. Many operators want payback under 12 months.
Does this include existing-customer expansion revenue?
Only if you fold expansion into ARPU. If accounts grow over time through upsells, use a blended ARPU that reflects that growth, or the LTV will understate the true value of retained customers.