CAC & LTV Calculator
Free tool · by Daniel HaketThe single ratio that tells you if your business model works: LTV:CAC. Enter your acquisition spend, customers and revenue, and this returns your customer acquisition cost, lifetime value and whether the two are in a healthy balance.
What this free tool is great for: a quick, one-off job with no signup — it runs entirely in your browser, so nothing leaves your device and there's nothing to manage.
Its honest limit: it works the number out once, by hand — it won't pull your live data, trend it over time, or flag when it shifts, so it's a snapshot rather than a dashboard.
What CAC and LTV really measure
CAC — customer acquisition cost — is everything you spend to win one customer: ad spend, sales salaries and tools, divided by the customers those efforts brought in. LTV — lifetime value — is the profit a customer brings over their whole relationship with you. Together they answer the most important question in any business: do you make more from a customer than it costs to get them?
The 3:1 rule, and its limits
The widely-cited healthy benchmark is an LTV:CAC of around 3:1 — for every 1 you spend acquiring, you earn 3 back over the lifetime. Below 1:1 you lose money on every customer and you're just buying revenue at a loss. But far above 3:1 isn't the trophy it looks like: a 6:1 ratio often means you're under-investing in growth and leaving the market to rivals. The ratio is a guide, not a number to maximise.
Use gross profit, not revenue
The most common LTV mistake is using revenue instead of gross profit. A customer who pays 1,000 but costs 600 to serve has an LTV of 400, not 1,000 — 60% lower than the revenue version suggested. Always run LTV on margin. The second trap is payback: even a great LTV:CAC can strangle your cash flow if it takes 18 months to earn back the acquisition cost, because you fund that gap out of pocket the whole time.
The four levers
You improve the ratio from four directions, and retention is usually the biggest. Lower CAC: tighter targeting, more referrals and organic, cut the channels that don't convert. Raise price or discount less. Increase margin by lowering the cost to serve. And keep customers longer — every extra month of retention drops straight into LTV, which is why churn work often beats acquisition work dollar for dollar.
Fully-loaded CAC or it doesn't count
The flattering version of CAC divides new customers into ad spend and stops. The honest version loads everything acquisition actually costs: salaries and freelancers for marketing and sales, tools and agencies, content production, affiliate commissions — divided by customers those efforts produced. The gap between the two is routinely 2-3×, which means a "profitable" funnel on ad-only CAC can be structurally underwater. Compute both if you like — the marginal number guides bidding decisions — but never present ad-only CAC as the acquisition cost of the business.
Investors reverse-engineer the loaded number from your P&L anyway; better to be the founder who brought it up first.
LTV's load-bearing assumptions
Lifetime value is a projection wearing a metric's costume, and its assumptions deserve sunlight. Churn-based lifetime (1 ÷ monthly churn) assumes churn stays constant forever — optimistic when your data is young and your early adopters are your biggest fans. Margin matters: LTV on revenue overstates by whatever your gross margin isn't. And averages smuggle in distortion: one whale in a small dataset doubles "average" LTV while the median customer looks nothing like it.
Prefer margin-adjusted, cohort-grounded, median-aware LTV — and when your company is under two years old, treat any lifetime beyond 24 months as speculation, because you literally haven't observed it yet.
Payback period: the survival metric
The LTV/CAC ratio answers "is this worth it eventually?" — payback period answers "can we afford it now?", and for cash-constrained companies the second question rules. CAC payback is the months of gross profit needed to recoup acquisition cost: at €300 CAC and €25 monthly gross profit, twelve months — meaning every new customer locks up cash for a year before contributing. A stellar 5:1 LTV/CAC with an 18-month payback can still strangle a bootstrapped company that grows fast, because growth multiplies the cash locked in unrecouped customers.
Healthy SaaS benchmarks hover around 12 months or less; the tighter your funding, the shorter yours needs to be.
Segment or be misled
One blended LTV/CAC hides the portfolio underneath. Split by channel and the story sharpens: organic and referral customers routinely show multiples of the paid-social ratio; one segment funds another's losses. Split by plan or customer size and product strategy appears: enterprise-ish customers with triple the LTV at only double the CAC argue for moving upmarket. The action isn't to compute more numbers for their own sake — it's that budget reallocations hide inside the segments.
Most businesses that "can't acquire profitably" actually have one profitable channel being averaged down by two unprofitable ones they haven't had the data — or the nerve — to cut.
Frequently asked questions
What is a good LTV:CAC ratio?
Around 3:1 is the widely-cited healthy target. Below 1:1 means you lose money per customer; much above 3:1 can mean you're under-spending on growth.
How do I calculate CAC?
Total sales and marketing spend divided by the number of new customers it won in the same period. This tool does it for you.
How do I improve these numbers?
Lower acquisition cost, increase retention and price, or improve margin. Closing more of your existing pipeline — with a CRM like Pipedrive — lowers CAC directly.
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The pricing behind our reviews is published as an open dataset: 475 tools and 823 cost-trap flags, each with the sentence it came from. Free to use with attribution (CC BY 4.0).
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