How to use the CAC and LTV Calculator
- 1. Enter costsMarketing and sales spend for a period, and the new customers it brought.
- 2. Enter customer valueAverage monthly revenue per customer, gross margin and monthly churn.
- 3. Read the ratioSee LTV:CAC, lifetime and payback, with every step shown.
Worked example
A course business spends ₹2,00,000 on marketing and ₹50,000 on sales in a month and gains 50 customers, so CAC is ₹2,50,000 ÷ 50 = ₹5,000. Each customer pays ₹2,500 a month at a 70% gross margin, which is ₹1,750 of gross profit a month. With 5% of customers leaving each month, the average customer stays 1 ÷ 0.05 = 20 months, so LTV is ₹1,750 × 20 = ₹35,000.
That gives an LTV:CAC ratio of 7 : 1, and the business earns back the ₹5,000 acquisition cost in about 2.9 months of gross profit.
Reading and improving the numbers
- Ratio below 1: every new customer loses money. Cut acquisition cost or raise value before spending more.
- Around 3:1 is a commonly quoted healthy level, but it is a rule of thumb, not a standard.
- Very high ratios can mean you are under-investing in growth.
- Payback matters for cash flow: a long payback ties up money even when the ratio looks good.
The model assumes revenue and churn stay steady, which real businesses rarely manage, so treat it as a planning estimate. Use gross margin rather than revenue for LTV, otherwise the ratio looks better than it is. Work out ad returns with the ROAS calculator and plan spend with the marketing budget calculator.
Frequently asked questions
What if customers pay once rather than monthly?
Enter the average gross profit from repeat purchases per month, or use a simpler LTV of average order value × margin × expected orders.
Should CAC include salaries?
For a full CAC, yes: include the sales and marketing team's cost for the period, as well as ad spend and tools.
Is the CAC and LTV Calculator free?
Yes, the CAC and LTV Calculator is free. The first time you see your first result, you are asked for your name and WhatsApp number once. After that, this and every other Uncodemy tool opens straight away without the form.