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LTV CAC Calculator

Use this LTV CAC calculator to estimate gross profit per month, customer lifetime months, estimated LTV, LTV/CAC ratio, CAC payback, and whether acquisition economics are plausible.

Planning estimate

Live calculator

LTV / CAC

Estimated LTV$2,340.00

25 estimated customer lifetime months.

LTV / CAC ratio3.6x

$93.60 gross profit per month.

CAC payback6.9 months

CAC divided by monthly gross profit.

Use this as a simplified subscription-economics check. Cohorts, expansion revenue, discounts, CAC payback, support costs, and churn changes can move the real ratio.

What it calculates

LTV CAC Calculator uses average revenue per account, gross margin, monthly churn, and CAC to estimate gross profit per month, customer lifetime months, estimated LTV, LTV/CAC ratio, and CAC payback.

Formula

LTV/CAC formula

LTV = ARPA x gross margin / monthly churn; LTV/CAC = LTV / CAC

This is a simplified subscription estimate. It assumes churn is stable and uses gross profit, not revenue, for LTV.

How to use

Steps

  1. Enter average monthly revenue per account.
  2. Enter gross margin and monthly churn.
  3. Enter customer acquisition cost.
  4. Review estimated LTV, LTV/CAC ratio, and CAC payback.

Example

Sample calculation

ARPA$120
Gross margin78%
Monthly churn4%
Gross profit per month$93.60
Customer lifetime months25.0
Estimated LTV$2,340
LTV/CAC3.6x
CAC payback6.9 months

Calculator use

Best for

  • Estimating subscription acquisition economics from ARPA, gross margin, churn, and CAC.
  • Checking whether paid acquisition looks plausible before increasing marketing spend.
  • Comparing churn sensitivity, gross-margin changes, CAC payback, and retention assumptions.
  • Preparing a SaaS or recurring-revenue planning conversation with the simplified formula visible.

Before relying on it

Check first

  • Using revenue instead of gross profit when judging LTV against acquisition cost.
  • Assuming churn is stable when cohort behavior, expansion, contraction, or annual contracts change retention.
  • Ignoring CAC payback, sales cycle length, onboarding cost, support cost, discounts, or channel mix.
  • Treating one simplified LTV/CAC ratio as proof that acquisition spend is safe to scale.

Details

What to know before using the result

Gross-profit LTVUse margin, not revenue

The estimate uses average monthly revenue per account multiplied by gross margin, then divides by monthly churn so LTV reflects gross profit instead of top-line revenue.

Churn sensitivitySmall changes matter

Monthly churn drives customer lifetime months. A lower churn input can make LTV look much stronger, so compare conservative and optimistic retention cases.

CAC paybackMonths to recover acquisition cost

CAC payback divides customer acquisition cost by monthly gross profit. A good LTV/CAC ratio can still be risky when payback takes too long.

Next decisionConnect acquisition to SaaS health

After checking LTV/CAC, review MRR, churn rate, burn multiple, startup runway, and client profitability before increasing acquisition spend.

Benchmarks

How to read the result

Under 1x: Weak.

The estimated customer value is lower than acquisition cost.

1x - 3x: Needs work.

May be acceptable early, but payback, retention, and margins need attention.

3x+: Healthier.

A common planning heuristic for stronger subscription acquisition economics.

Calculator accuracy

Methodology and assumptions

Formula, inputs, limitations and review record
Formula

LTV = ARPA x gross margin / monthly churn; LTV/CAC = LTV / CAC

Inputs used

ARPA / monthly revenue, Gross margin, Monthly churn, CAC

Limitations

The LTV/CAC estimate assumes stable monthly churn and uses gross profit from ARPA and gross margin. It does not model cohorts, expansion, contraction, discounting, sales cycle length, payback risk, or channel-specific CAC.

Review record

Catalog QA baseline on June 6, 2026. This date marks the catalog-wide automated and editorial QA baseline, not a tool-specific expert review.

Cite this page

Toolkit Shelf. LTV CAC Calculator. https://toolkitshelf.com/tools/ltv-cac-calculator

FAQ

Common questions

What is LTV/CAC?

LTV/CAC compares estimated customer lifetime value to customer acquisition cost.

Why use gross margin in LTV?

Gross margin estimates the revenue left after direct service or delivery costs, which is closer to customer value than revenue alone.

What makes this estimate simplified?

It assumes stable churn and does not model cohort behavior, expansion revenue, discounting, or payback risk.

Should expansion revenue be included in LTV/CAC?

Expansion revenue can matter, but this simplified calculator keeps the estimate conservative by using current ARPA, gross margin, churn, and CAC. Cohort models can add expansion later.