Quick answer: CAC (customer acquisition cost) = sales & marketing spend ÷ new customers. LTV (lifetime value) = monthly revenue × gross margin × average lifespan. A healthy business has an LTV:CAC ratio of about 3:1 or higher and recovers CAC within 12 months. Enter your numbers below.
CAC & LTV calculator
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Customer acquisition cost (CAC)
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Lifetime value (LTV)
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LTV : CAC ratio
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CAC payback (months)
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How CAC and LTV are calculated
CAC = total sales and marketing spend ÷ number of new customers from that spend. LTV = average monthly revenue × gross margin × average customer lifespan in months. The LTV:CAC ratio tells you whether each customer is worth what you pay to acquire them — the widely used benchmark is 3:1. Below 1:1 you lose money on every customer; far above 5:1 you may be under-investing in growth. CAC payback is how many months of margin it takes to earn back the acquisition cost.
Frequently asked questions
What is a good LTV:CAC ratio?Around 3:1 is the common target. Below 1:1 means you spend more to acquire a customer than they are worth; much above 5:1 can signal you are under-spending on growth.
How do I calculate CAC?Add up all sales and marketing costs for a period and divide by the number of new customers acquired in that period.
What is CAC payback period?The number of months of gross margin per customer needed to recover the acquisition cost. Under 12 months is generally healthy for subscription businesses.
Is this calculator free?Yes — free and private, calculated in your browser.