Financial Tools

CAC and LTV Calculator

Lifetime value is gross profit per month divided by churn, not revenue times a number you liked. Put it next to what a customer costs to win and the business either works or it does not.

What it costs to win a customer

Marketing Spend (per month)

Sales Cost (per month, fully loaded)

New Customers (per month)

What a customer is worth

Revenue Per Customer (per month)

Gross Margin

Monthly Churn (share who leave each month)

Values shown are examples. Edit them to match your situation.

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Unit Economics

Cost To Acquire	$0
Gross Profit Per Month	$0
Expected Customer Life	$0
Lifetime Value	$0
Profit Per Customer	$0
Payback Period	$0
LTV To CAC	$0

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For illustration only, not financial advice. Results are estimates based on the numbers you enter and do not constitute an offer, rate quote or approval.

Unit economics decide how long the cash lasts.

Walk the balance month by month and see the month it reaches zero.

Check your runway

How this is worked out

Acquisition cost is everything spent to win customers, marketing and sales together, divided by the customers won. Not marketing alone: the salespeople are part of the cost of the sale.

If a customer has a constant chance of leaving each month, their expected life is one divided by that monthly churn rate. At 3% churn a customer stays about 33 months. That is where lifetime comes from, and it is why a small change in churn moves lifetime value so violently.

Lifetime value uses gross profit, not revenue. Revenue based lifetime value flatters every business that has a cost of delivery, which is every business. Gross profit per month is revenue per customer times gross margin.

Payback is acquisition cost divided by monthly gross profit: how many months before the customer has repaid what it cost to win them. It decides how fast you can reinvest, which is a different question from whether the customer is profitable at all.

Expected lifetime as the reciprocal of churn, the standard constant hazard result

Questions people ask

What ratio should I be aiming for?

Three to one is the level most investors treat as healthy, and one to one means the business destroys money on every customer. Above five to one usually means you are underspending on growth rather than that everything is wonderful.

Should salaries be in acquisition cost?

Yes, the fully loaded cost of everyone whose job is winning customers, plus the tools they use. Leaving them out is the most common way a CAC number ends up flattering.

My churn is annual, not monthly.

Divide by twelve only as a rough guide, it is not exact. Better to measure the share of customers who leave in a month directly, because that is the number the lifetime formula needs.

What if churn is zero?

Then lifetime is unbounded and the formula gives no answer, which is the correct response rather than a large number. Nobody has zero churn over a long enough window, so measure a longer one.

Is payback or ratio more important?

Payback, if cash is tight, because it is when the money comes back. Ratio, if capital is available, because it is how much is there in total. Most small businesses should watch payback first.

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