01
Pick your models
Choose the Simple or churn-based LTV method, and whether to compute CAC from spend or enter it directly.
LTV CAC Calculator
LTV:CAC ratio, payback, and max CAC you can afford — on gross profit.
Updated Reviewed by Sajid Hussain· Editor
Is your growth sustainable?
LTV, CAC and the one ratio that decides if you can scale
The LTV:CAC ratio is the single metric that tells you whether your growth is sustainable: it divides the lifetime gross profit per customer (LTV) by what you paid to acquire them (CAC). Below 1:1 you lose money on every new customer; the 3:1 benchmark means three times what you spent in acquisition comes back in profit. This LTV CAC calculator finds the ratio, payback period, and the maximum CAC you can afford to hit your target — working on gross profit, not revenue, so the number actually means something.
The LTV:CAC ratio is the headline number. It divides lifetime gross profit per customer by what you paid to acquire them. The benchmark is 3:1: below 1:1 you lose money on every customer; 1–3:1 is thin; 3–5:1 is healthy; above 5:1 is strong but often means you're under-investing in growth. Just as important is the CAC payback period — how many months it takes to earn that acquisition cost back. A 2:1 ratio that pays back in 6 months can be healthier for ecommerce cash-flow than a 5:1 ratio that takes two years.
The #1 mistake: computing LTV on revenue, not profit. A customer who spends 200 over their lifetime at a 45% margin is only worth 90 in profit — so a flattering 6.7:1 revenue ratio is really a 3:1 profit ratio. This tool computes LTV on gross profit by default and shows the revenue figure only as a contrast, with a warning, so you never make that comparison by accident.
Both LTV models in one tool — no competitor does this. The Simple model (AOV × purchases/year × margin × lifespan) for repeat-purchase ecommerce sellers, and the churn-based model (÷ churn rate) for subscriptions — with the conversion shown both ways (50% churn = a 2-year lifespan). Pick whichever matches the data you actually have.
Max affordable CAC — the planning number founders actually need. Enter a target ratio and the tool reverses to your max affordable CAC — the ceiling you can bid up to and still hit your goal — plus the headroom versus what you spend today. It also shows how a small retention gain (one more half-purchase a year) moves the ratio, because lifting repeat rate is almost always cheaper than buying more customers. Works in any currency — no rates, no conversion, universal math.
Quick facts
- Heroes computed
- LTV:CAC · LTV · CAC · Payback
- On gross profit
- Not revenue — the trap we warn against
- Both LTV models
- Simple + churn-based in one UI
- Killer feature
- Max affordable CAC (reverse calc)
- Planning lever
- Retention sensitivity readout
- Any currency
- Universal — no rates, no FX
How it works
From your numbers to a sustainability verdict
Four short steps — under a minute.
02
Enter CAC
Your marketing spend and new customers, or a CAC you already track.
03
Enter economics
AOV, purchases per year, gross margin, and how long customers stay (or your churn rate).
04
Read the verdict
Get LTV, the ratio, payback, a health verdict, and the max CAC you can afford to hit your target.
Steps to use the LTV CAC Calculator: Pick your models, Enter CAC, Enter economics, Read the verdict.
Formula
Exactly what the calculator computes
Standard unit-economics math, in plain algebra — every figure on gross profit.
01
CAC
CAC = Sales & Marketing Spend ÷ New Customers
What it costs to win one customer. Or enter a CAC you already track. Use blended CAC for a whole-business view, paid-only CAC to judge paid channels.
02
Annual gross profit per customer
Annual Gross Profit = AOV × Purchases/Year × Gross Margin%
The profit a retained customer generates each year. The margin term is what turns revenue into real, comparable value.
03
LTV — Simple method
LTV = AOV × Purchases/Year × Gross Margin% × Lifespan (years)
For repeat-purchase ecommerce when you know roughly how long customers stay. Always on gross profit.
04
LTV — Churn-based method
LTV = (AOV × Purchases/Year × Gross Margin%) ÷ Annual Churn%
For subscriptions or when you track churn. Implied lifespan = 1 ÷ churn, so 50% churn = a 2-year lifespan — the two methods reconcile exactly at the same lifespan.
05
LTV:CAC ratio & payback
Ratio = LTV ÷ CAC · Payback (months) = CAC ÷ Monthly Gross Profit
The ratio is the headline health metric; payback is how fast the cash comes back. Both matter — fast payback beats a high ratio that takes years.
06
Max affordable CAC (reverse)
Max CAC = LTV ÷ Target Ratio
The ceiling you can spend per customer and still hit your goal. Headroom = max CAC − current CAC tells you how much acquisition budget is unused (or overspent).
Worked example
A 50 AOV DTC brand, end to end
Watch the gross-profit framing change the story.
Scenario
A brand with a $50.00 AOV, $2.00 purchases/year, a $45.00% gross margin, a $2.00-year customer lifespan, and a CAC (blended) CAC. Sustainable?
1
Step 1 · Annual gross profit per customer
$50.00 × $2.00 purchases × $45.00% margin = $45.00/year. (Note the margin — without it you'd wrongly use $100.00 of revenue.)
Annual gross profit: $45.00
2
Step 2 · Lifetime value (gross profit)
$45.00/year × $2.00 years = $90.00. Revenue LTV would be $200.00 — but that's not profit, so never compare it to CAC.
LTV: $90.00 (not $200.00)
3
Step 3 · Ratio & payback
Ratio = $90.00 ÷ CAC (blended) = $3.00:1 — right on the healthy 3:1 mark. Monthly gross profit is $45.00 ÷ 12 = $3.75, so payback = CAC (blended) ÷ $3.75 = $8.00 months.
Ratio $3.00:1 · payback $8.00 months
4
Step 4 · Max affordable CAC
To hold a 3:1 target, you can spend up to $90.00 ÷ 3 = $30.00 per customer. You're at CAC (blended) — right at the limit, no headroom to bid higher without lifting LTV first.
Max CAC: $30.00
The takeaway
A textbook-healthy 3:1. The fastest lever isn't spending more — it's retention: nudging repeat purchases from 2 to 2.5/year lifts LTV to $112.50 and the ratio to 3.75:1 with zero extra CAC.
Industry benchmarks
How to read your numbers
Standard benchmarks. Ecommerce ratios run lower than SaaS because gross margins are lower (40–60% vs 70–85%).
| Metric | Poor | Average | Good | Excellent |
|---|---|---|---|---|
LTV:CAC ratio Corporate Finance Institute LTV/CAC Ratio Guide 2025 | < 1:1 | 1–3:1 | 3–5:1 | 4–5:1 |
CAC payback (months) Stripe CAC Payback Period Guide 2025 | > 18 | 12–18 | 6–12 | < 6 |
Gross margin (ecom) NYU Stern Sector Margins 2025 | < 30% | 30–45% | 45–60% | 60%+ |
Repeat purchase rate Yotpo State of Brand Loyalty Report 2025 | < 15% | 15–30% | 30–50% | 50%+ |
Annual churn Klaviyo Ecommerce Benchmark Report 2025 | > 70% | 50–70% | 30–50% | < 30% |
Why this calculator
Calcrux vs other LTV/CAC calculators
SaaS tools only do churn-based LTV; ecommerce tools only do simple — and most compute LTV on revenue. We fix all three.
| Feature | Calcrux | Shopify Analytics | Klaviyo |
|---|---|---|---|
| LTV on gross profit (not revenue) | Often revenue | ||
| Simple AND churn-based LTV | One or the other | Churn only | |
| CAC payback period | Some | ||
| Max affordable CAC (reverse) | Rare | ||
| Health verdict + benchmarks | Some | ||
| Retention sensitivity readout | |||
| Revenue-LTV trap warning | |||
| Works in any currency, free | Most US-only |
Common mistakes
How unit economics get misread
Computing LTV on revenue, not profit
Why it matters
A customer who spends 200 lifetime at 45% margin is worth 90 in profit. Using the 200 makes a 3:1 profit ratio look like a flattering 6.7:1 — and justifies overspending on acquisition.
Fix
Always use gross-profit LTV. We do by default and warn whenever the revenue figure would mislead.
Judging the ratio while ignoring payback
Why it matters
A 5:1 ratio sounds great, but if payback takes 24 months you're funding acquisition and inventory out of pocket for two years. Cash, not just the ratio, kills ecommerce brands.
Fix
Read the ratio and the payback period together. Under 12 months keeps cash flowing.
Using optimistic lifespan or churn
Why it matters
Assuming a 5-year lifespan when most customers buy twice and vanish inflates LTV and hides an unsustainable model. Garbage lifespan in, garbage ratio out.
Fix
Use real cohort data. If unsure, use churn-based LTV from a measured churn rate — it's harder to fool yourself.
Mixing blended and paid CAC
Why it matters
Blended CAC (all spend ÷ all new customers) includes free/organic customers, flattering the number. Paid CAC judges paid channels honestly. Comparing a paid-channel LTV to blended CAC is apples to oranges.
Fix
Be consistent. Use blended for the whole-business view, paid CAC to evaluate paid acquisition.
Chasing a higher ratio by cutting spend
Why it matters
A 5:1+ ratio often means you're acquiring too slowly and leaving growth on the table. The "best" ratio isn't the highest — it's the one that maximizes profitable growth.
Fix
If your ratio is well above 3:1 with fast payback, use the max-affordable-CAC headroom to scale acquisition.
Treating LTV as fixed
Why it matters
LTV isn't destiny — it's the most movable number you have. A small lift in repeat rate or AOV compounds across the whole customer base for zero extra CAC.
Fix
Use the retention sensitivity readout: often a half-purchase more per year beats any acquisition tactic.
Tips
Improve the ratio that matters
Attack retention first
Lifting repeat purchases is usually cheaper than buying customers — and it raises LTV across everyone you've ever acquired.
Raise AOV with bundles
Higher order value flows straight into LTV (at your margin) without touching CAC. Bundles, upsells, and minimums all help.
Protect gross margin
Because LTV is on profit, a few points of margin move the ratio more than most acquisition tactics. Watch discounting and fees.
Watch payback, not just ratio
Shorter payback frees cash to reinvest sooner. Faster-paying channels can fund faster growth even at a lower ratio.
Use the headroom to scale
If max-affordable-CAC sits well above your current CAC, you have room to bid up and acquire faster while staying healthy.
Re-check after big changes
New product mix, a price change, or a fee increase all move margin and LTV. Re-run the numbers before scaling spend.
Use cases
When founders reach for this
The LTV CAC Calculator works across every stage of the workflow.
Setting an ad budget
Find the max CAC you can afford at a 3:1 target, then set channel bids and budgets against that ceiling.
Pitching investors
Show a defensible, gross-profit LTV:CAC ratio and payback — the unit economics every investor asks for.
Deciding to scale or fix
A ratio below 3:1 says fix retention/margin first; well above 3:1 with fast payback says scale acquisition.
Comparing channels
Run paid CAC per channel against the same LTV to see which acquisition channels actually pay back.
Subscription vs one-time
Use churn-based LTV for a subscription line and Simple for a one-time product, in the same tool.
Modeling a retention push
See how a loyalty program that lifts repeat rate changes LTV and the ratio before you build it.
Glossary
Unit-economics vocabulary
Every important term you'll encounter in this calculator and the broader topic.
- LTV (Lifetime Value)
- Total GROSS PROFIT an average customer generates over their relationship with you. Always use profit, not revenue, when comparing to CAC.
- CAC
- Customer Acquisition Cost — sales & marketing spend ÷ new customers acquired in the same period.
- LTV:CAC ratio
- LTV ÷ CAC. The headline health metric: 3:1 healthy, <1:1 unsustainable, >5:1 possibly under-investing.
- CAC payback period
- Months to recover CAC from a customer's monthly gross profit. <6 ideal, >12 risky for ecommerce cash flow.
- Blended CAC
- All acquisition spend ÷ all new customers (including organic). Flattering but useful for a whole-business view.
- Paid CAC
- Spend ÷ customers from PAID channels only. The honest number for judging paid acquisition.
- Churn rate
- Share of customers who stop buying each period. Lifespan = 1 ÷ churn, so 50% annual churn ≈ 2 years.
- Contribution margin
- Gross profit per customer per period — the rate at which a customer pays back their CAC.
- Gross margin
- (Revenue − COGS) ÷ revenue. The lever that turns lifetime revenue into lifetime profit.
Help & answers
Frequently asked questions
Everything you need to know about how the LTV CAC Calculator works.
01What is a good LTV:CAC ratio?
The classic benchmark is 3:1 — about three times what you paid to acquire a customer. Below 1:1 is unsustainable; 1–3:1 is thin; 3–5:1 is healthy; above 5:1 is strong but often signals under-investing in growth. Ecommerce ratios run lower than SaaS because gross margins are lower (40–60% vs 70–85%).
02Should LTV be calculated on revenue or gross profit?
Gross profit — always. A customer who spends 200 at a 45% margin generates only 90 in profit. Using revenue (200) makes a real 3:1 ratio look like a flattering 6.7:1, leading to overspending. This calculator uses gross-profit LTV by default and shows revenue LTV as contrast only, with a warning.
03What is CAC payback period and what is a good one?
CAC payback = CAC ÷ monthly gross profit per customer. Under 6 months is ideal; 6–12 is acceptable; over 12 is risky for ecommerce since you fund acquisition and inventory until the customer turns profitable. A 2:1 ratio with 6-month payback can be healthier than a 5:1 ratio that takes two years.
04How do I calculate customer acquisition cost (CAC)?
CAC = sales & marketing spend ÷ new customers in the same period. Include ad spend, agency fees, and acquisition salaries; exclude retention. Blended CAC gives a whole-business view; paid CAC judges paid channels honestly. The calculator computes it, or you can enter your own.
05What is the difference between simple and churn-based LTV?
Simple LTV = AOV × purchases/year × gross margin × lifespan. Churn-based LTV = (AOV × purchases/year × gross margin) ÷ annual churn rate. They reconcile: 50% churn = 2-year lifespan. This tool offers both so you can use whichever data you have.
06How much can I afford to spend to acquire a customer?
Max affordable CAC = LTV ÷ target ratio. At an LTV of 90 and a 3:1 target, you can spend up to 30. The calculator shows this ceiling plus headroom vs your actual CAC: positive = unused budget to grow faster; negative = overspending. This is the number founders need for budgeting.
07Why is ecommerce LTV:CAC lower than SaaS?
Mostly gross margin. SaaS runs 70–85% margins so most revenue becomes profit. Ecommerce runs 40–60% because of product cost, shipping, and fulfilment — compressing profit LTV. That's also why computing LTV on profit, not revenue, matters more in ecommerce.
08Why does payback period matter more than the ratio alone?
Cash velocity. The ratio tells you whether a customer is eventually profitable; payback tells you how fast. A 2:1 ratio with 6-month payback can be healthier than a 5:1 ratio that takes 24 months — a common way "profitable on paper" ecommerce brands run out of cash. Read both together.
09What is the difference between blended CAC and paid CAC?
Blended CAC divides all acquisition spend by all new customers (including organic). It flatters the number because free customers cost nothing. Paid CAC counts only paid-channel customers — the honest cost of buying growth. Use blended for whole-business health, paid CAC to judge paid channels.
10Does this calculator work in my currency and country?
Yes. Fully global and currency-agnostic: enter every monetary value in your own currency and all results are shown in that currency. No exchange rates or conversions — ratios, months, and percentages are universal. The benchmarks (3:1 ratio, sub-12-month payback) are international standards.
11How do I improve my LTV:CAC ratio?
Four levers: raise repeat-purchase rate (cheapest — lifts LTV across everyone you've acquired), increase AOV, protect gross margin (LTV is on profit, so margin matters a lot), or cut CAC. The retention sensitivity readout shows how much a half-purchase more per year would raise your ratio.
12Does this account for discounting future cash flows?
No — this uses nominal LTV (no discounting for the time value of money). For most ecommerce models with 1–3 year lifespans the difference is small. For lifespans of 5+ years or formal DCF valuations, treat the LTV here as a slight overstatement and apply your own discount rate.
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Category
Ecommerce Seller Operations
Subcategory
financial profitability
Availability
Global · 9 markets
Price
Free forever
Topics
ltvcacltv cac ratiocustomer lifetime valuecustomer acquisition costunit economicspayback periodretentionecommercecalculatorltv to cac ratiocac payback period
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