How to use the LTV and CAC calculator
Enter what an average customer pays you each month, your gross margin, the share of customers who leave each month, and what you pay to acquire one. The calculator estimates lifetime value, compares it with acquisition cost, and shows how long a customer takes to pay back.
The formulas
LTV = monthly revenue per customer x gross margin / monthly churn
LTV to CAC ratio = LTV / CAC
Payback in months = CAC / (monthly revenue per customer x gross margin)Dividing by churn turns a monthly number into a lifetime number: at 5% monthly churn, the average customer stays about 20 months. The formula assumes churn stays steady, so treat the result as an estimate and recheck it as real cohorts age.
A worked example
A subscription app earns $12 a month per customer at a 70% margin, and 6% of customers leave each month. Each customer brings $8.40 of gross profit a month and stays about 16.7 months, an LTV of $140. Acquiring a customer costs $40, so the LTV to CAC ratio is 3.5 and the cost is earned back in under 5 months. These figures are illustrative.
What LTV to CAC ratio to aim for
A ratio of about 3 is a common rule of thumb for subscription businesses: below 1 you lose money on every customer, and far above 3 can mean you are under-investing in growth. Fast payback matters as much as the ratio when cash is tight. CAC vs CPA vs LTV explains how the three numbers fit together, and the CPA calculator turns your ceiling into a bid.
Frequently asked questions
How do you calculate customer lifetime value?
Multiply monthly revenue per customer by gross margin and divide by monthly churn. $12 x 70% / 6% gives an LTV of $140.
What is a good LTV to CAC ratio?
Around 3 to 1 is a common target. Below 1 means each customer costs more than they bring in.
How can I raise LTV?
Keep customers longer, raise what they spend through upgrades or bundles, and improve margin. Lower churn has the biggest effect because it extends every customer’s lifetime.