Enter marketing and customer inputs
Example data table
| Scenario | Monthly Revenue | Gross Margin | Monthly Churn | Net CAC | LTV | LTV:CAC | Payback |
|---|---|---|---|---|---|---|---|
| Paid Search SaaS | $120 | 75% | 5% | $750 | $1,800 | 2.40x | 8.33 mo |
| Content-Led Growth | $200 | 80% | 3% | $1,400 | $5,333 | 3.81x | 8.75 mo |
| Paid Social Funnel | $95 | 70% | 8% | $650 | $831 | 1.28x | 9.77 mo |
| Enterprise Outbound | $900 | 85% | 1.5% | $8,000 | $51,000 | 6.38x | 10.46 mo |
Formula used
Adjusted Monthly Revenue = Monthly Revenue × (1 + Expansion Revenue %)
Monthly Contribution Margin = Adjusted Monthly Revenue × Gross Margin %
Base CAC = Direct CAC
or Base CAC = (Marketing Spend + Sales Spend) ÷ New Customers
Net CAC = Base CAC + Onboarding Cost − Referral Credit
Customer Lifespan = Manual Override or 1 ÷ Monthly Churn Rate
Discounted LTV = Monthly Contribution Margin × Discount Factor
LTV:CAC Ratio = Discounted LTV ÷ Net CAC
Payback Period = Net CAC ÷ Monthly Contribution Margin
Net Value = Discounted LTV − Net CAC
This version uses contribution margin instead of revenue alone, which makes the ratio more useful for budget decisions and channel comparisons.
How to use this calculator
- Enter average monthly revenue earned from one customer.
- Add gross margin to convert revenue into true contribution value.
- Enter churn, or provide a manual lifespan if you already know it.
- Choose direct CAC or derive CAC from spend and customer volume.
- Include onboarding costs and any referral credits for cleaner acquisition math.
- Set your benchmark ratio and payback target to judge performance quickly.
- Press calculate to see the ratio, payback, ROI, and recovery chart.
- Use the CSV and PDF buttons to save the analysis for reporting.
FAQs
1. What is a good LTV:CAC ratio?
A common benchmark is around 3:1. Lower values can mean weak efficiency, while very high values can suggest cautious spending or untapped growth capacity.
2. Should I use revenue or margin for LTV?
Margin is better for decisions because it reflects the cash contribution available to recover acquisition cost. Revenue alone can overstate customer value.
3. Why does churn matter so much?
Churn controls expected customer lifespan. Higher churn shortens the earning window, lowers LTV, and usually weakens the ratio quickly.
4. What does payback period show?
Payback period estimates how many months of contribution margin are needed to recover CAC. Shorter payback usually improves cash flow and reduces scaling risk.
5. When should I override lifespan manually?
Use a manual lifespan when you have cohort data, contract terms, or stable historical retention that is more reliable than a simple churn-based estimate.
6. Why include onboarding costs?
Onboarding, implementation, and service setup costs are part of true customer acquisition economics. Excluding them can make CAC look artificially low.
7. What is the benefit of discounting LTV?
Discounting recognizes that future cash flows are worth less than current cash flows. It gives a more conservative and often more realistic valuation.
8. Can I compare channels with this calculator?
Yes. Run separate inputs for paid search, social, content, partnerships, or outbound sales. Compare ratio, payback, and net value to rank channel quality.