TRJoin the newsletterStart a partnership
☰×

Unit economics

LTV/CAC Calculator

Does a customer cost more than they bring in?

Enter monthly revenue per customer, gross margin, monthly churn and customer acquisition cost. We work out customer lifetime, lifetime value, the LTV/CAC ratio and how many months it takes to earn back the cost.

Cost
Free
Sign-up
Not needed
Your data
Stays in your browser

The average amount a customer pays each month.

The share of revenue left after the direct cost of delivering the product.

What percentage of your customers leave each month?

Sales and marketing spend in a period ÷ new customers won in that period.

Opened with example figures; enter your own. Amounts are in Turkish lira (₺); the maths works the same in any currency.

Result

LTV/CAC ratio…x

…

Customer lifetime
…
Lifetime value (LTV)
…
CAC payback
…
Monthly gross profit per customer
…

What does the ratio mean?

  • Below 1

    Loss zone

    Each new customer costs more than they leave you. The more you grow, the bigger the loss.

  • 1 to 3

    Thin zone

    Customers cover their cost, but the margin is thin. There may be little left for fixed costs and growth.

  • 3 and above

    Generally considered healthy

    Each customer leaves at least three times their acquisition cost in gross profit.

Source: David Skok, SaaS Metrics 2.0 (opens in a new tab). A widely used rule of thumb. Skok writes that the best SaaS companies have a ratio above 3 and that a CAC taking more than 12 months to pay back weakens profitability; he also stresses these are only guidelines.

Everything is calculated in your browser. We do not save your figures; they are only written into this page's address so you can share it. If you ask for the result by email, your figures go to our server only to create that email and are not stored. Results are estimates based on your assumptions; they are not financial or legal advice.

How it is calculated

The formula in plain English; each step builds on the one before.

  1. 01

    Monthly gross profit

    ARPU × Gross margin

    The gross profit a customer leaves you each month.

  2. 02

    Customer lifetime

    1 ÷ Monthly churn

    If you lose 4 per cent of your customers each month, the average customer stays 25 months.

  3. 03

    LTV

    Monthly gross profit ÷ Monthly churn

    The total gross profit a customer leaves you over the time they stay.

  4. 04

    LTV/CAC and payback

    LTV ÷ CAC and CAC ÷ Monthly gross profit

    The ratio shows how many times over each customer earns back their cost; the payback period shows how many months that takes.

Frequently asked questions

Can't find your answer here? Write to us.

What is LTV?

Customer lifetime value: the gross profit a customer leaves you over the time they stay. This tool divides monthly gross profit by the monthly churn rate. Using gross profit rather than revenue shows what a customer really leaves you.

What happens if I enter 0 for churn?

A customer who never leaves would in theory stay for ever; lifetime and LTV come out infinite and the ratio loses its meaning. In reality every customer leaves one day. If you do not have data yet, use a cautious estimate.

What goes into CAC?

Everything you spend to win customers in a period: ads, the sales team, campaigns, tools. Divide it by the number of new customers won in that period. Counting only ad spend makes CAC look lower than it is.

What counts as a good ratio?

The widely used rule of thumb is an LTV/CAC ratio of 3 or above (David Skok, SaaS Metrics 2.0). It is a rule of thumb; weigh it against your sector, growth rate and cash position.

Related articles

We explain the thinking behind the numbers on our blog, in Turkish.

Run another calculation.

The other tools are free too, with no sign-up. GK Startup Bülteni, our newsletter on the startup world, comes out on LinkedIn in Turkish; subscribe to get new issues.

Subscribe on LinkedIn (opens in a new tab)All tools