CAC & LTV Calculator
Financial CalculatorsMeasure your unit economics. Know your Customer Acquisition Cost and Lifetime Value to build a profitable business.
💰 Customer Acquisition Cost
$
$
📈 Lifetime Value
$
🔮 Scenario Analysis
CAC
$150
Customer Acquisition Cost
LTV
$780
Lifetime Value
LTV:CAC Ratio
5.2:1
Excellent
Business Health
5.2:1
Payback Period5 months
📊 Cumulative Profit per Customer
Profit Loss⭐ Breakeven
💡 Key Insights
Outstanding unit economics! Your LTV/CAC ratio of 5.2:1 indicates a highly scalable business. Consider investing more aggressively in customer acquisition.
CAC=Total Costs÷New Customers
LTV=AOV×Freq×Relation×Margin
- CAC: Customer Acquisition Cost.
- LTV: Lifetime Value of a customer.
- AOV: Average Order Value.
- Healthy Ratio: LTV:CAC ≥ 3:1.
What is CAC & LTV Calculator?
The Customer Acquisition Cost (CAC) to Lifetime Value (LTV) ratio calculator evaluates the long-term financial sustainability of a company's marketing and sales efforts. It computes the total capital expenditure required to acquire a single new customer against the projected gross margin that customer will generate throughout their entire relationship with the business.
Practical Calculation Example
If a software company spends $5,000 on a marketing campaign that acquires 50 new users, the CAC is $100 per user. If an average user pays $50 monthly and retains their subscription for 24 months with an 80% gross margin, the LTV is $960. The resulting LTV:CAC ratio is 9.6:1, indicating exceptionally high profitability per acquisition.
The LTV:CAC Ratio
Venture capitalists and financial analysts use the LTV:CAC ratio as the primary benchmark to gauge a company's growth efficiency and market scalability:
| LTV:CAC Ratio | Business Health Status | Strategic Implication |
|---|---|---|
| ≤ 1:1 | Critical Failure | The company loses capital on every acquisition; fundamentally unsustainable. |
| 1:1 to 2:1 | High Risk | Barely breaking even; highly vulnerable to minor market fluctuations. |
| 3:1 | The Industry Standard | The optimal clinical benchmark balancing aggressive growth and profitability. |
| > 5:1 | Capital Under-utilization | High margins, but the company is likely restricting its potential market share growth by underspending on marketing. |
History and Origin
The LTV:CAC metric became a foundational business standard in the late 1990s and early 2000s. It was popularized alongside the rise of subscription-based software (SaaS) and venture capital valuation models to accurately evaluate scalable technology startups.
Frequently Asked Questions
How accurate is this CAC & LTV Calculator tool?
Our tools utilize high-precision floating point math guaranteeing accuracy up to the 6th decimal place.
Is this free to use?
Yes, all converters and calculators on ToolsMetrics are 100% free with no limits.