Quick answer
LTV CAC Calculator: what it calculates
LTV CAC Calculator calculates ltv / cac ratio from arpa, gross margin and monthly churn. The core method is LTV = ARPA x gross margin / monthly churn; LTV/CAC = LTV / CAC.
Business Calculators
LTV CAC Calculator
Use this LTV CAC calculator to estimate customer lifetime value, acquisition payback, and whether acquisition economics are plausible.
Reviewed May 25, 2026EstimateFormula shown
ResultLTV / CAC ratio
InputsARPA, Gross margin, Monthly churn, CAC
FormulaLTV/CAC formula
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.
Formula
LTV/CAC formula
LTV = ARPA x gross margin / monthly churn; LTV/CAC = LTV / CACThis is a simplified subscription estimate. It assumes churn is stable and uses gross profit, not revenue, for LTV.
How to use
Steps
- Enter average monthly revenue per account.
- Enter gross margin and monthly churn.
- Enter customer acquisition cost.
- Review estimated LTV, LTV/CAC ratio, and CAC payback.
Example
Sample calculation
ARPA$120
Gross margin78%
Monthly churn4%
LTV/CAC3.6x
Calculator use
Best for
- Use this LTV CAC calculator to estimate customer lifetime value, acquisition payback, and whether acquisition economics are plausible.
- Checking lTV/CAC formula with the formula and assumptions visible.
- Comparing the result with the sample calculation and benchmark table before using it elsewhere.
- Pricing, runway, cash flow, or work assumptions before an operating decision.
Before relying on it
Check first
- Using the ltv / cac ratio without confirming that arpa, gross margin and monthly churn describe the same real-world case.
- Ignoring that this is a simplified subscription estimate. It assumes churn is stable and uses gross profit, not revenue, for LTV.
- Relying on the number without checking whether the visible assumptions match the real-world task.
- Mixing cash and accounting profit, or monthly recurring items and one-time items.
Benchmarks
How to read the result
The calculator is a decision aid, not a fixed rule. Use the output to compare scenarios and document your assumptions. Benchmark ranges are broad planning heuristics unless this page names a specific source for the range.
Under 1xWeak
The estimated customer value is lower than acquisition cost.
1x - 3xNeeds 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
The formula, inputs, example, and limitations are shown so the result is checkable, not just a number in a box.
Formula
LTV = ARPA x gross margin / monthly churn; LTV/CAC = LTV / CAC
Inputs used
ARPA, Gross margin, Monthly churn, CAC
Limitations
Results are estimates for quick planning and should be checked before important financial, legal, tax, health, or business decisions.
Last reviewed
May 25, 2026
Cite this page
Toolkit Shelf. LTV CAC Calculator. Retrieved May 25, 2026, from 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.
Can this replace accounting or legal advice?
No. Business calculators are scenario tools. Contracts, taxes, payment timing, accounting treatment, refunds, and legal requirements can change decisions.
What should I do after using a business calculator?
Save the assumptions, compare a conservative scenario, and review the result with actual books, contracts, or an advisor before making a high-stakes decision.
Why might another calculator show a different result?
Different calculators may use different rounding, assumptions, default rates, formulas, or input timing. Compare the visible formula and inputs before relying on the number.