LTV:CAC Calculator
Model gross-profit lifetime value, acquisition cost and payback using your assumptions. Default values are illustrative scenarios, not stage benchmarks. A modeled ratio does not establish business health. Calculations run in your browser.
Your Unit Economics
💡 Your Insights
Understand the Lifetime-Value Model
Monthly gross profit = monthly revenue per account × gross margin. Estimated gross-profit LTV = monthly gross profit ÷ monthly customer churn. This simplified steady-state model assumes constant revenue, margin and churn, and excludes expansion and discounting. It is not net profit or a measured lifetime outcome.
CAC = entered acquisition spend ÷ new customers. Keep their period and cohort definitions aligned. LTV:CAC divides the modeled gross-profit LTV by CAC; a ratio alone cannot certify business health or justify increasing spend.
Modeled payback = CAC ÷ monthly gross profit. It assumes the contribution continues unchanged and does not account for churn during the payback period. Estimated lifetime = 1 ÷ churn is also a model result, not a promised customer lifespan.
Zero churn cannot yield a finite lifetime estimate from this formula; zero acquisition cost makes the ratio undefined. Use SaaS benchmarks only with their source-specific populations and definitions, not as a universal stage-by-stage target.
Frequently Asked Questions
How is lifetime value estimated?
Monthly revenue per account multiplied by gross margin, divided by monthly customer churn. This simplified gross-profit LTV model assumes constant revenue, margin and churn, with no expansion or discounting. It is not net profit or a measured lifetime outcome.
Does a ratio certify healthy unit economics?
No. The modeled ratio alone does not establish sustainability. Check cohort retention, cost completeness, sales-cycle lag, cash constraints and uncertainty in the inputs.
What is CAC payback here?
Acquisition cost divided by modeled monthly gross profit per account. It assumes the contribution continues at that level; it does not model attrition during payback or establish an industry target.
Unit Economics Hypotheses to Evaluate
Assess these options with cohort data, cost completeness and retention guardrails; the model does not establish their likely effect.
Increase LTV
- Reduce churn through better onboarding and support
- Evaluate pricing changes with conversion and retention guardrails
- Improve gross margin by optimizing infrastructure costs
- Cross-sell and upsell to existing customers
Decrease CAC
- Focus on high-intent channels (content, word-of-mouth, partnerships)
- Improve conversion rates through funnel optimization
- Reduce time-to-close in sales process
- Build a referral program to lower acquisition cost
Optimize Both
- Compare customer segments using gross contribution and acquisition cost
- Implement product-led growth (free trials, freemium)
- Develop strategic partnerships for distribution
- Track CAC and LTV per channel to focus on winners
Related Reading
Optimize Your Unit Economics
Discuss your acquisition costs, cohort retention and measurement gaps. We can agree an audit scope and availability before any paid engagement.
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Evaluate SE Ranking for search tracking andMixpanel for product event analysis. Check current capabilities and integrations; you still need reconciled acquisition costs, revenue and cohort definitions to assess LTV:CAC.