LTV CAC calculator: customer lifetime value and acquisition cost

Two numbers every growing business should know: what a customer is worth over time, and what one costs to win. This calculator shows lifetime value, customer acquisition cost, the ratio between them and the months it takes to earn the cost back. It is free, needs no sign-up, and your numbers stay on your device.

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How it works

Yearly gross profit per customer = average order value × orders a year × gross margin. Lifetime value (LTV) = yearly gross profit × years a customer stays. Using gross profit rather than sales shows what a customer is really worth to you after the cost of what they buy.

Customer acquisition cost (CAC) = monthly marketing and sales spend ÷ new customers that month. LTV to CAC ratio = LTV ÷ CAC; 3 : 1 or more is marked healthy, 1 : 1 to 3 : 1 thin, and below 1 : 1 losing money. Payback months = CAC ÷ (yearly gross profit ÷ 12), the time a new customer takes to repay what you spent to win them.

How to use it

  1. Enter your average order value and orders per customer per year.
  2. Enter your gross margin and how many years a customer stays.
  3. Add monthly marketing and sales spend and new customers per month.

Questions

What is a good LTV to CAC ratio?

A common rule of thumb is at least 3 : 1, meaning a customer brings three times what it cost to win them. Below 1 : 1 you lose money on each new customer. Very high ratios can mean you could spend more to grow.

How do I calculate customer lifetime value?

Multiply average order value by orders per year and by your gross margin, then by the number of years a typical customer stays. The calculator uses gross profit, not sales, so the number is closer to what you keep.

How can I lower CAC?

Referrals, reviews, useful content that keeps bringing people in, and quick replies to enquiries all help. Improving how many enquiries become paying customers lowers CAC without spending more money on ads.

Is this calculator free?

Yes. It is free with no sign-up and runs in your browser. Your numbers stay on your device unless you choose to copy the result, share it on WhatsApp, save a PDF or send it to us.

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