LTV to CAC Ratio and CAC Payback Calculator

Growth is easy to buy and hard to afford. A company can add customers every month and still burn cash if each one costs more to acquire than it ever returns. That is why investors, finance leaders, and sales executives keep coming back to two checks: the ratio of LTV to CAC, and how many months it takes to earn back what you spent to win the customer.

You may already know both inputs. Our CAC calculator totals what it costs to acquire a customer, and our CLTV calculator estimates what a customer is worth over the relationship. This calculator puts them together.

The Ratio and the Payback Period

The LTV to CAC ratio divides lifetime value by acquisition cost. A ratio of 3:1 is the most commonly quoted target: each customer returns three times what it cost to acquire them. Below 1:1, every new customer loses money. Well above 5:1 can mean you are underinvesting in growth that would pay for itself.

CAC payback measures time rather than total value. Divide CAC by the monthly gross profit a customer generates (monthly revenue per customer multiplied by gross margin). A $1,200 CAC on a customer paying $100 a month at an 80% margin pays back in 15 months. The shorter the payback, the less cash you need to fund growth.

Calculate Your LTV to CAC Ratio

Enter your customer acquisition cost, average monthly revenue per customer, gross margin, and either a known lifetime value or a monthly churn rate. The calculator returns the ratio, the payback period in months, and a plain-language read on how efficient your acquisition is.

How to Read Your Results

• LTV to CAC ratio: How much lifetime gross profit each acquisition dollar produces. Track it by channel, since a blended number can hide one channel subsidizing another.
• CAC payback: Months of gross profit needed to recover acquisition cost. Compare it with your average customer lifetime; payback should arrive well before customers typically leave.
• Lifetime value: When estimated from churn, lifetime value is monthly gross profit per customer divided by monthly churn. Small changes in churn move it significantly.

Use gross profit rather than revenue in lifetime value. A ratio built on revenue flatters businesses with heavy service or hosting costs. If churn is the weak link, the churn rate calculator is a good next step.