CAC/LTV Calculator
Understand your customer acquisition cost vs lifetime value ratio
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What's included:
- ✓CAC calculation guide
- ✓LTV estimation methods
- ✓Healthy ratio benchmarks
- ✓Improvement strategies
About the CAC/LTV Calculator
The CAC/LTV Calculator is a free tool for B2B founders and marketers who want to know whether their unit economics actually work. It walks through how to calculate customer acquisition cost, total sales and marketing spend divided by new customers won, and how to estimate lifetime value from average revenue per customer, gross margin, and churn rate.
To use it, plug in your sales and marketing spend, new customer count, average deal size, and churn, then compare the resulting LTV to CAC ratio against the commonly cited 3:1 benchmark. A ratio below that suggests you are spending too much to acquire customers relative to what they are worth; well above it can signal underinvestment in growth. Use the result to decide whether to tighten targeting, raise prices, or increase acquisition spend.
What is inside
- CAC calculation guide
- LTV estimation methods
- Healthy ratio benchmarks
- Improvement strategies
Frequently Asked Questions
What is a good LTV to CAC ratio?
A LTV to CAC ratio of 3:1 is a widely used benchmark, meaning a customer is worth three times what it costs to acquire them. Below 1:1 means you lose money on every customer, and much above 5:1 can mean you are underspending on growth and leaving market share on the table. Context like sales cycle and margin still matters.
How do you calculate CAC?
Customer acquisition cost equals total sales and marketing spend over a period divided by the number of new customers won in that same period. Include salaries, ad spend, tools, and agency fees for an accurate figure. Calculating CAC by channel or campaign, rather than only company wide, usually reveals which acquisition sources are actually efficient.
How do you estimate customer lifetime value?
A simple LTV estimate multiplies average revenue per customer by gross margin percentage, then by average customer lifespan, or divides by churn rate for a recurring revenue business. For a subscription company with 100 dollars average monthly revenue, 80% gross margin, and 2% monthly churn, LTV is roughly 4,000 dollars. Refine it further with cohort data as it becomes available.
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