CAC & LTV Calculator

Acquisition cost is what you spend to win one customer; lifetime value is what that customer is worth to you before they stop. The ratio between them tells you whether your growth model pays: below 1:1 you lose money on every new customer, and the common benchmark is 3:1 — every unit of currency spent on acquisition returning three in gross profit.

The two formulas

Both numbers are derived from your real data:

CAC = (Marketing spend + Sales spend) ÷ New customers acquired | LTV = AOV × Purchases/year × Lifespan years × Gross margin% | Ratio = LTV ÷ CAC | Payback months = CAC ÷ Monthly gross profit per customer

Worked example

A store spends 50,000 on marketing and wins 100 customers in a month:

1. Acquisition cost = 50,000 ÷ 100 = 500 per customer
2. Average order = 100, with ten orders a year per customer
3. Customer lifetime two years, margin 100% (digital products)
4. Lifetime value = 100 × 10 × 2 × 100% = 2,000
5. Ratio = 2,000 ÷ 500 = 4:1 — inside the healthy range
6. Payback period = 500 ÷ (100 × 10 ÷ 12) ≈ 6 months

Practical tips

• Below 1:1 you lose on every new customer; 1:1–3:1 works but leaves nothing for growth; 3:1–5:1 is the healthy range.
• Above 5:1 you may be underspending rather than outperforming — a competitor who spends more reaches the market first.
• If you advertise in one currency and sell in another, convert to a single currency at the rate for the same period, not today's — otherwise you are measuring a ratio that never happened.
• Calculate it per channel: the channel bringing the cheapest customers may bring the shortest-lived ones, and the average hides that.