CAC & LTV (incl. churn)

Compute CAC, LTV and LTV:CAC in seconds. Add churn and gross margin for a realistic view of unit economics.

Inputs

Monthly marketing + sales spend

New customers acquired (month)

ARPA / ARPU per month

Gross margin (%)

Monthly churn rate (%)

Expansion (optional, % of ARPA)

Churn is the % of customers that cancel per month. If you don’t know, start with a conservative estimate.

Results

CAC

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LTV (gross)

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LTV:CAC

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Details

LTV uses the simple steady‑state approximation: LTV ≈ (ARPA × gross margin) / churn.

How to interpret

CAC (Customer Acquisition Cost) is the cost to acquire one new customer in a period. The clean version is:

CAC = (marketing + sales spend) / new customers

LTV (Lifetime Value) is how much contribution profit you expect from a customer. For subscription businesses, a common approximation is:

LTV ≈ (ARPA × gross margin) / churn

Then LTV:CAC tells you whether acquisition is economically healthy. Many teams use 3:1 as a loose target, but it depends on payback time and growth speed.

What “good” can look like

LTV:CAC < 1: you’re buying unprofitable growth.
1–3: could be OK if payback is fast and churn is improving.
3–5: typically healthy (if churn and margin are real).
5+: often means under‑spending (or attribution issues).