LTV CAC Calculator

The classic benchmark is 3:1 — a customer is worth about three times what you paid to acquire them. Below 1:1 you lose money on every customer (unsustainable); 1–3:1 is thin and leaves little room for error; 3–5:1 is healthy; above 5:1 is strong but often means you're under-investing in growth and could profitably acquire faster. Ecommerce ratios tend to run lower than SaaS because gross margins are lower (40–60% vs 70–85%).

Gross profit — always, when comparing to CAC. This is the single most common unit-economics mistake. A customer who spends $200 over their lifetime at a 45% margin generates only $90 in gross profit. Using the $200 revenue figure makes a real 3:1 ratio look like a flattering 6.7:1, which leads brands to overspend on acquisition and run out of cash. This calculator uses gross-profit LTV by default and shows the revenue figure only as a contrast, with a warning.

CAC payback is the number of months it takes to earn back the cost of acquiring a customer, from their monthly gross profit: CAC ÷ monthly contribution margin. Under 6 months is ideal, 6–12 months is acceptable, and over 12 months is risky for ecommerce because you fund acquisition and inventory out of pocket until the customer turns profitable. A 2:1 ratio with a 6-month payback can be healthier for cash flow than a 5:1 ratio that takes two years.

CAC = total sales & marketing spend ÷ the number of new customers acquired in the same period. Include ad spend, agency fees, promotions, and acquisition-related salaries; exclude retention and loyalty spend. "Blended" CAC divides all spend by all new customers (including organic) and gives a whole-business view; "paid" CAC counts only paid channels and is the honest number for judging paid acquisition. This calculator computes CAC for you, or lets you enter one you already track.

Simple LTV = AOV × purchases per year × gross margin × customer lifespan (in years) — best for repeat-purchase ecommerce when you know roughly how long customers stay. Churn-based LTV = (AOV × purchases per year × gross margin) ÷ annual churn rate — best for subscriptions or when you track churn. They reconcile exactly: lifespan = 1 ÷ churn, so a 50% annual churn equals a 2-year lifespan. This tool offers both in one interface so you can use whichever data you have.

Your max affordable CAC = LTV ÷ your target ratio. At a $90 gross-profit LTV and a 3:1 target, you can spend up to $30 per customer. The calculator shows this ceiling plus the "headroom" versus your current CAC: positive headroom means you have unused acquisition budget and could bid higher to grow faster; negative headroom means you're overspending and will fall short of your target. This reverse calculation is the number founders actually need for budgeting.

Mostly gross margin. SaaS businesses run 70–85% gross margins, so most of each dollar of revenue becomes lifetime profit. Ecommerce runs 40–60% margins because of product cost, shipping, and fulfilment, which compresses the profit LTV for the same revenue. That's also why a "good" ecommerce ratio (often 2.5–3:1) looks lower than a "good" SaaS ratio (3–4:1+) — and why computing LTV on profit, not revenue, matters even more in ecommerce.

Because of cash velocity. The LTV:CAC ratio tells you whether a customer is profitable eventually; payback tells you how fast. A brand with a 2:1 ratio and a 6-month payback recovers its spend quickly and can reinvest, while a 5:1 ratio with a 24-month payback ties up cash in acquisition and inventory for two years — a common way for "profitable on paper" ecommerce brands to run out of money. Read both together.

Blended CAC divides ALL acquisition spend by ALL new customers, including those who came organically (SEO, referrals, word of mouth). It flatters your number because free customers cost nothing. Paid CAC counts only customers from paid channels against paid spend, giving the true cost of buying growth. Use blended for a whole-business health check, but use paid CAC — compared to the same LTV — when deciding whether a paid channel is worth scaling.

Yes. It is fully global and currency-agnostic: you enter every monetary value (spend, AOV, CAC) in your own currency and all results are shown in that currency. There are no exchange rates or conversions because the math is universal — ratios, months, and percentages mean the same thing everywhere. The benchmarks (3:1 ratio, sub-12-month payback) are international standards.

Four levers: raise retention/repeat-purchase rate (usually the cheapest — it lifts LTV across every customer you've ever acquired), increase AOV through bundling and upsells, protect gross margin (because LTV is on profit, a few margin points move the ratio a lot), or reduce CAC by improving targeting and conversion. The calculator's retention sensitivity readout shows how much just a half-purchase more per year would raise your ratio — often more than any acquisition tactic.

No — version 1 uses nominal LTV (no discounting for the time value of money). For most ecommerce models with customer lifespans of 1–3 years, the difference is small and nominal LTV is the standard, easy-to-reason-about figure. If you model very long lifespans (5+ years) or run formal DCF-based valuations, treat the LTV here as a slight overstatement and apply your own discount rate to the later years.