Free tool
LTV:CAC Calculator
Lifetime value vs cost to acquire — the number investors check first.
The LTV:CAC ratio tells you whether each customer is worth more than it costs to win them. Enter your numbers to get your customer lifetime value, the ratio, and how long it takes to earn the acquisition cost back.
LTV = revenue per customer per month × gross margin × average lifespan in months. LTV:CAC is that divided by what you spend to acquire one customer.
The rough benchmark is 3:1 or better. Below 1:1 you lose money on every customer; between 1 and 3 the economics are thin and easily eaten by churn or rising ad costs.
CAC payback — how many months of gross margin it takes to earn back the acquisition cost — matters just as much. Under ~12 months is healthy; much longer and you need a lot of cash to grow.
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Common questions
What is a good LTV to CAC ratio?
Around 3:1 or higher is the common benchmark — a customer is worth roughly three times what it costs to acquire them. Below 1:1 you lose money per customer; between 1 and 3 the margin is thin and vulnerable to churn or rising ad costs.
How do you calculate customer LTV?
Multiply revenue per customer per month by your gross margin, then by the average number of months a customer stays. That's the gross profit one customer generates over their lifetime. Enter the numbers above to compute it.
What is CAC payback period?
It's how many months of a customer's gross margin it takes to earn back what you spent to acquire them. Under about 12 months is healthy; a long payback means you need more cash on hand to fund growth.