LTV and CAC calculator: does the unit economics add up?

Payback by month

The line shows how much margin the customer has generated by each month. The dotted line shows how much it cost to acquire them. Where the line crosses the dotted line, acquisition has paid off.

Margin over the entire lifetime — CAC —

What makes up the line

How to use it

1. Take the order value and purchase frequency from the sales report for a clearly defined period, not from your intuition. If customers buy once a quarter, enter 0.33.

2. Enter refunds and the average discount if you have them: the calculator subtracts them from the order value before calculating margin. LTV based on gross order value is overstated by exactly this amount.

3. Set the lifetime in months if you know it from cohort data. If you know the churn rate, switch to “set by churn”: lifetime will be calculated as 1 ÷ churn, and both values will be visible at once.

4. Enter gross margin: order value minus the cost of the product and its direct delivery costs. Don’t include rent or accounting here.

5. The expense is split into two fields for a reason: ad spend gives you paid CAC, while adding salaries and contractors gives you blended CAC—the figure you should use to make decisions.

6. If you have multiple channels, expand “Break down acquisition by channel.” The expense and customer count will then be totaled from the channels automatically, and the right column will show a table with CAC for each one.

The formula and what it includes

• Order value — revenue from one purchase at the list price, before deducting the cost of goods sold
• Refunds and discount — the proportions by which actual revenue is below the list price; subtracted before calculating margin
• Purchases per month — how many times one customer buys per month; 0.5 means once every two months
• Lifetime — how many months the customer stays with you; you can enter it or derive it from churn
• Churn — the share of customers who leave each month. With uniform churn, average lifetime equals 1 ÷ churn: at 5% per month, that is 20 months
• Margin — gross margin—the share of the order value left after the cost of goods sold
• Paid acquisition — ad spend: the amount paid to advertising platforms. Produces paid CAC
• Salaries — employees, agencies, and services. Together with ad spend, they produce blended CAC—the full cost of acquiring a customer
• Discount rate — the annual rate used to convert future margin into today’s money: margin in month thirty-six is worth less than margin in month one

Example breakdown: $2,000 order value, one-year lifetime, expenses in two parts

The input data is the same as the default field values: you can calculate it mentally and confirm that the tool is telling the truth.

• Average order value $2,000
• Purchases per month 1
• Refunds 0%
• Discount 0%
• Lifetime 12 months
• Gross margin 50%
• Paid acquisition $360,000
• Salaries and contractors $40,000
• Customers acquired 100

1. Order value after refunds and discount: 2,000 × 1 × 1 = $2,000.

2. Monthly ARPU: 2,000 × 1 = $2,000. Purchases over the lifetime: 1 × 12 = 12.

3. Revenue LTV: 2,000 × 12 = $24,000. Margin LTV: 24,000 × 50% = $12,000.

4. Paid CAC: 360 000 ÷ 100 = 3 600 $. Blended CAC: (360 000 + 40 000) ÷ 100 = 4 000 $.

5. Profit per customer: 12,000 − 4,000 = $8,000.

6. Monthly margin: 2,000 × 50% = $1,000. Payback: 4,000 ÷ 1,000 = 4 months—this is the point where the line on the chart changes to a dashed line.

LTV / CAC = 12,000 ÷ 4,000 = 3. The customer pays back the acquisition cost in 4 of the 12 months and generates profit for the remaining 8. Paid CAC would give you 3.33—that difference is how people fool themselves when they leave salaries out.

Frequently asked questions

• What is a good LTV-to-CAC ratio?

  There is no universal number; it depends on the business and on what you include in the expense. The scale is simple: below one, the customer does not even cover their acquisition cost; around one, you break even, and any forecasting error makes the result negative; at three or above, you have room for fixed costs and growth. The threshold in the calculator is a regular field set to 3 by default. Below it, you’ll find chips with benchmarks for different business types and a table showing where those numbers come from. But don’t look only at the ratio—look at payback too: 5× with a three-year payback means a cash flow gap.

• How is paid CAC different from blended CAC, and which one should I use?

  Paid CAC is ad spend divided by the number of customers. Blended CAC is the full acquisition cost, including marketing salaries, agencies, and services. Make decisions based on blended CAC: salaries cost real money just like clicks. Paid CAC serves a different purpose: comparing channels and deciding where to add budget. The most common mistake is to calculate paid CAC, call it CAC, and then wonder why the bank account is empty. The calculator shows both lines as soon as you fill in the second expense field.

• How do I calculate LTV if I have a subscription and only know the churn rate?

  Switch the lifetime setting to “set by churn” and enter the monthly churn from your billing system. Lifetime is calculated as 1 ÷ churn: at 5% per month, that is 20 months. LTV based on margin is then ARPU × margin ÷ churn—the same formula used in English-language SaaS materials. Both values, lifetime and churn, appear in the result row at the same time, so you don’t have to convert them mentally.

• Why use a discount rate?

  Because the margin in month thirty-six and the margin in month one are different amounts: the first is already working for you, while the second may never arrive—the customer may leave earlier. Without discounting, LTV is overstated for long lifetimes. Enter the annual rate—usually the cost of capital or the return on an alternative investment—and a discounted LTV will appear next to the regular LTV. Zero in this field means “no discounting,” so the row is hidden.

• Why compare LTV with CAC based on margin rather than revenue?

  Because revenue is not yours: you have to pay for the product, delivery, and payment processing out of it. If you compare CAC with revenue instead of margin, the ratio will increase by exactly the cost of goods sold, making an unprofitable business look profitable. The table shows both figures—the difference between them is the cost of goods sold.

• What does the channel breakdown show?

  Total CAC is an average that hides the details. Usually, one channel brings in customers at twice the cost of the others and pulls the average up, but you can’t see that in the overall figure. Add channels with their expenses and customer counts—the calculator will calculate CAC and LTV-to-CAC for each one, flag the channel that skews the averages, and automatically add the totals to the fields above so you don’t enter the same numbers twice.

• What should I do if acquisition cost is zero?

  Then CAC equals zero, and the LTV-to-CAC ratio is undefined: there is nothing to divide by. In this case, the calculator shows a dash instead of a number and leaves all other rows intact. In practice, a CAC of zero usually means you left out someone’s salary.

• Is any data sent anywhere?

  No. The calculation runs entirely in your browser: after the page loads, it makes no requests—you can see this in the “Network” tab of the developer tools. Field values are written to the page URL so you can share the calculation by link, and the selected currency is saved in your browser. Both remain on your device.

• How can I include the calculation in a presentation?

  In two ways. “Download CSV” produces a file with the monthly table, channels, and all totals—it opens in Excel and Google Sheets. “Print and PDF” expands all collapsed tables and sends the page to print. The form is hidden, leaving only the results, chart, and tables. In the print dialog, choose “Save as PDF.”