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LTV:CAC calculator
Four numbers tell you whether growth pays: what a customer brings in, your margin, your churn and what a customer costs to win. Get lifetime value, the LTV:CAC ratio and how long CAC takes to earn back.
Your numbers
Revenue left after hosting, support and other costs of serving a customer. SaaS is often 70–85%.
Sales and marketing spend ÷ new customers won, over the same period.
Payback, month by month
The formulas
- Monthly margin per customer = revenue per customer × gross margin
- Average lifetime = 1 ÷ monthly churn (in months)
- LTV = monthly margin × average lifetime
- LTV:CAC = LTV ÷ CAC
- CAC payback = CAC ÷ monthly margin (in months)
Benchmarks
Investors and operators usually look for an LTV:CAC of at least 3:1 and a CAC payback under 12 months. Treat them as rules of thumb: a business with fast payback can grow on its own cash even at a lower ratio, while a high ratio with a three-year payback still needs a lot of capital.
Where the number misleads
Simple LTV assumes churn is constant and revenue per customer never grows. Early churn is usually higher than late churn, and expansion revenue raises what loyal customers are worth, so cohort data beats this formula once you have it. Blended CAC also hides channels: a 3:1 average can be a 6:1 channel subsidising a 1:1 one.
Free in Outcomify
Find where new customers drop off before they pay
The cheapest way to improve LTV:CAC is to convert more of the sign-ups you already paid for. Outcomify’s free key funnels show each step from sign-up to paid, and whether what you shipped moved it.