LTV:CAC Calculator
Estimate customer lifetime value and compare it with acquisition cost to evaluate unit economics.
Enter your numbers
Use the example values to understand the tool, then swap in your own assumptions.
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Business case details
Use the chart, scenarios, and checklist to pressure-test the headline result.
Educational business estimate only — not financial, legal, tax, accounting, or investment advice.
| Monthly churn | LTV | LTV:CAC | Payback |
|---|---|---|---|
| 2% | $20,000 | 16.67:1 | 3 months |
| 3% | $13,333 | 11.11:1 | 3 months |
| 8% | $5,000 | 4.17:1 | 3 months |
- LTV
- $20,000
- LTV:CAC
- 16.67:1
- Payback
- 3 months
- LTV
- $13,333
- LTV:CAC
- 11.11:1
- Payback
- 3 months
- LTV
- $5,000
- LTV:CAC
- 4.17:1
- Payback
- 3 months
Scale guidance
Consider increasing acquisition: High LTV:CAC with fast payback can justify testing more acquisition, if retention quality and market saturation hold.
Priority check: Increase budget in measured tests and monitor cohort retention, CAC creep, and payback.
Benchmark band
Potentially under-spending: Very high ratios can mean acquisition is constrained — but verify payback and market quality first.
| Segment/channel | ARPA | Churn | CAC | LTV:CAC | Payback | Note |
|---|---|---|---|---|---|---|
| SMB / low ACV | $325 | 4.1% | $900 | 7.13:1 | 3.46 months | Lower CAC can still disappoint if churn is materially higher. |
| Core segment | $500 | 3% | $1,200 | 11.11:1 | 3 months | The entered base-case segment. |
| Mid-market / high ACV | $850 | 2.3% | $2,160 | 13.99:1 | 3.18 months | Higher CAC may work if retention, expansion, and sales cycle quality hold. |
| Month | Retention | Active from 100 | Cumulative gross profit |
|---|---|---|---|
| 1 | 97% | 97 | $38,800 |
| 3 | 91.3% | 91.27 | $112,943 |
| 6 | 83.3% | 83.3 | $216,023 |
| 12 | 69.4% | 69.38 | $395,964 |
| 24 | 48.1% | 48.14 | $670,700 |
Retention quality checklist
- Compare logo churn, revenue churn, and expansion separately; blended churn can hide weak cohorts.
- Segment LTV:CAC by channel, customer size, and sales motion before using a blended ratio to scale spend.
- Pair LTV:CAC with CAC payback so a strong lifetime ratio does not create a cash-flow problem.
- Watch CAC creep as spend increases; early high-intent channels rarely scale linearly.
What this means
11.11:1 is a unit-economics signal. Strong ratios are useful, but churn, gross margin, and CAC quality matter more than a single headline number.
Decision memo
Copy or print a concise local-only memo for approval, planning, or a downside review.
Watch-outs
- Small assumption changes can flip the decision. Always run a downside case.
- ROI does not automatically mean cash is available when you need it.
- Use these outputs as planning estimates, not professional advice.
Formula
Gross profit per month = monthly ARPA × gross margin.
Estimated LTV = monthly gross profit ÷ monthly churn.
LTV:CAC = estimated LTV ÷ customer acquisition cost.
Worked example
If monthly ARPA is $500, gross margin is 80%, monthly churn is 3%, and CAC is $1,200, estimated LTV is about $13,333 and LTV:CAC is about 11.11:1.
Sources and methodology
This calculator uses standard finance formulas and makes assumptions explicit so you can adjust the inputs for your business context.
Assumptions and limitations
This calculator is a planning aid. It depends on the quality of your assumptions and may not include taxes, financing costs, opportunity cost, attribution uncertainty, adoption risk, contract terms, or organization-specific edge cases.
FAQ
What is a good LTV:CAC ratio?
A 3:1 ratio is often cited as a healthy SaaS benchmark, but the right target depends on payback period, retention quality, margin, stage, and cash constraints.
Why does churn matter so much?
Lower churn increases estimated lifetime and therefore LTV. Small churn changes can have a large effect on the ratio.
Why use gross margin instead of revenue?
Gross margin better reflects the value left after serving the customer. Revenue-only LTV can overstate unit economics.
What if churn is zero?
Zero churn makes the simple formula undefined. Use a conservative churn assumption or a capped lifetime for planning rather than assuming infinite customer life.
Use the LTV:CAC Calculator without guessing what to do next
- Start with the example values to see what the main result looks like.
- Replace the example values with the best numbers you have right now; rough estimates are fine for a first pass.
- Change one input at a time so you can see which assumption actually moves the answer.
What the result means
Use the result as a business gut-check: does the money, time, and risk you put in look worth the return you expect to get back?
How to use it
If the answer looks strong, test it with a worse sales, adoption, margin, or cost assumption. If it still works, the case is healthier.
What can change it
Big ROI, LTV, or payback numbers can be fake-comfort if the inputs are guesses. The safest move is to ask, “what would make this number break?”
Example scenario
Compare your core customer segment against a newer channel using ARPA, gross margin, monthly churn, and CAC for each group separately.
Assumption to verify
The simple LTV formula assumes churn stays stable. If churn is new, seasonal, or based on a tiny cohort, run a conservative higher-churn case.
Check this next
Pair the ratio with CAC payback, retention cohorts, expansion revenue, discounting, and support cost before calling acquisition efficient.
Common uses
- Check whether acquisition spend is sustainable.
- Compare customer segments.
- Pair LTV:CAC with CAC payback.
Common questions
Is the LTV:CAC Calculator private?
CalcShelf calculators run without an account. Your entries stay in the calculator while you work; CalcShelf does not save them or place your numbers in shareable links.
How accurate is the LTV:CAC Calculator?
It is a planning model for business decisions. The math can be solid while the outcome changes if sales volume, adoption, margin, costs, or timing move.
What should I check after using the LTV:CAC Calculator?
Verify the revenue, margin, cost, capacity, and timing assumptions before approving spend or changing price.
Which calculator should I try next?
Try Campaign Budget Planner, CAC Payback Period Calculator, Marketing ROI Calculator as next checks so you can compare the same decision from another angle before acting.
Method behind the estimate
Business calculators use standard ROI, payback, gross-margin, CAC, LTV, and scenario-analysis formulas with user-entered assumptions.
Why the detail matters
Best used as planning models. The detail tables are designed to expose which assumption changes the decision, not to certify a forecast.
No account or saved inputs
Your calculator values are for your session. CalcShelf does not require an account, save calculator entries, or add your numbers to shareable URLs.
Copy or print safely
Use any copy, print, or worksheet controls as local handoff tools for your own notes, supplier calls, lender questions, or implementation checklist. They are there to help you explain the result to a human.
Before acting
Treat the result as a decision draft, not a verdict. Recheck the source numbers, run a downside case, and verify the real-world rule, quote, label, or spec that controls the final answer.
Last reviewed: May 11, 2026. See methodology and editorial policy for formulas, assumptions, rounding, review approach, and limitations. For real budgets, contracts, taxes, or investments, verify the inputs before acting.