Home Tools Product analyticsLTV and CAC calculator

LTV, CAC and churn calculator

Work out how much gross profit a customer brings over their lifetime, how many times that exceeds the cost of acquiring them, and after how many months CAC pays back. The second tab covers customer and revenue churn for a period and converts monthly churn to annual.

● Free, no sign-upUpdated: September 16, 2026

—

LTV (gross profit)—

LTV : CAC—

CAC payback—

Customer lifetime—

Gross profit per month—

CAC—

Cumulative gross profit per acquired customerchurn-adjusted

cumulative profitCACLTV — the limit

A simplification. LTV = ARPA × margin ÷ churn assumes constant churn and ARPA without expansion revenue. If customers churn less over time or pay more, real LTV is higher; if churn rises with customer age, lower.

Everything is calculated in your browser — nothing you enter is sent anywhere.

How to use it

Enter customer economicsARPA — average monthly revenue per customer — plus gross margin and monthly churn of paying customers.
Set CACA known value, or sales and marketing spend for a period together with the customers acquired in that same period.
Check paybackLTV:CAC shows the margin of safety; payback shows how many months a customer takes to return the acquisition cost. The chart marks the payback point.
Check churnIn the “Churn” tab, compute churn rate for a month, quarter or year, convert it to monthly and annual, and estimate revenue churn.

How to calculate LTV

LTV (lifetime value, CLV) is how much money a customer brings over the whole time they use the product. For a subscription business with constant monthly churn, the average customer lifetime is 1 / churn, and the LTV formula is simple:

Gross profit per month GP = ARPA × gross margin Average lifetime L = 1 / churn (months) LTV = GP × L = ARPA × margin / churn LTV : CAC = LTV / CAC

For example, $100 ARPA, 80% margin and 3% monthly churn give GP = $80 and LTV = 80 / 0.03 ≈ $2,667. With a $1,000 CAC, LTV:CAC ≈ 2.7.

Computing LTV from gross profit rather than revenue is essential: only the money left after the direct cost of serving the customer is comparable with CAC. Revenue LTV (ARPA / churn) is shown in the caption for reference.

Why 1 / churn is a simplification

The formula assumes the chance of leaving is the same in every month of a customer’s life. In practice new customers churn more than long-standing ones, and average base churn falls over time — not because customers grow more loyal, but because those prone to leave go first. This heterogeneity effect is analyzed in detail by Peter Fader and Bruce Hardie. So LTV from the average formula is an order-of-magnitude estimate; a precise one needs cohort retention curves (build them in the retention calculator).

CAC payback period and the LTV:CAC ratio

CAC (customer acquisition cost) is the full cost of acquiring one paying customer: ads, sales and marketing salaries, tools, divided by the new customers in the same period. The CAC payback period shows how many months of gross profit from a customer return that money. The calculator computes it two ways:

Simple payback = CAC / (ARPA × margin) Churn-adjusted the first month t for which Σ GP · (1 − churn)^(k−1), k = 1…t ≥ CAC ⇔ t ≥ ln(1 − CAC · churn / GP) / ln(1 − churn)

Simple payback is the standard metric as David Skok describes it in “SaaS Metrics 2.0”: how many months a customer must stay to pay back. Churn-adjusted payback answers a different question: when does the acquired cohort on average pay back, given that some customers leave early. It is always longer than the simple one, and if CAC exceeds LTV the cohort never pays back — the cumulative profit curve on the chart never crosses the CAC line.

The 3:1 benchmark

A widely quoted SaaS rule says LTV should be about three times CAC and CAC should pay back in about 12 months; David Skok is among those who popularized these benchmarks. It is a rule of thumb, not a law. A growing product in a market with network effects may deliberately run a lower ratio; a very high ratio sometimes means a company is underinvesting in growth. Watch the trend instead: is the ratio for recent cohorts rising or falling?

Churn rate: the formula and converting periods

Churn rate is the share of customers lost during a period out of customers at its start. To avoid counting departures by hand, derive them from the balance:

Lost = customers at start + new in period − customers at end Churn = lost / customers at start Annual from monthly a = 1 − (1 − m)^12 Monthly from annual m = 1 − (1 − a)^(1/12)

Do not multiply monthly churn by 12: at 3% a month, a year loses not 36% but 1 − 0.97¹² ≈ 30.6% of customers, because each month’s churn applies to an already smaller base. Quarterly churn converts to monthly the same way with an exponent of 1/3.

The “lost / at start” formula has a known inaccuracy: customers who join and leave within the period count in the numerator but not the denominator. With a large inflow of new customers this overstates churn — measure over short periods or only for the cohort that were customers at the start.

Revenue churn: gross, net and NRR

Gross revenue churn = (MRR of churned customers + downgrades) / starting MRR Net revenue churn = (lost MRR − expansion MRR from existing customers) / starting MRR NRR = 1 − net revenue churn

If expansion from remaining customers exceeds losses, net revenue churn turns negative and NRR exceeds 100%: the base grows even without new customers. MRR from new customers is not part of these formulas.

Common mistakes

Revenue LTV versus CAC. Ignoring margin overstates payback by the cost to serve.
CAC without salaries. Counting only ad spend understates CAC several-fold for products with a sales team.
Average base churn applied to new customers. New customers churn more than old ones, so a new cohort pays back later than calculated.
Mixing users and customers. Churn of free users and of paying accounts are different metrics; LTV needs the latter.

Sources

Skok D. SaaS Metrics 2.0 — A Guide to Measuring and Improving What Matters. forEntrepreneurs.com — LTV, CAC, CAC payback, LTV:CAC and payback benchmarks.
Fader P. S., Hardie B. G. S. How to Project Customer Retention. Journal of Interactive Marketing, 21(1), 2007 — retention models and why constant churn is a simplification.
Gupta S., Lehmann D. R. Managing Customers as Investments: The Strategic Value of Customers in the Long Run. Wharton School Publishing, 2005 — customer value with a constant retention probability.
Croll A., Yoskovitz B. Lean Analytics: Use Data to Build a Better Startup Faster. O'Reilly Media, 2013 — SaaS metrics: churn, CAC, LTV.

FAQ

How do I calculate customer LTV?

Multiply average monthly revenue per customer (ARPA) by gross margin and divide by monthly customer churn. For example, $100 × 80% / 3% ≈ $2,667. The formula assumes constant churn and ignores expansion revenue, so treat it as an order-of-magnitude estimate.

What is a good LTV:CAC ratio?

The widely quoted benchmark is about 3:1 with CAC payback in roughly 12 months. It is a SaaS rule of thumb, not a law: the acceptable ratio depends on company stage, cost of capital and how quickly acquisition pays back.

How do I calculate CAC payback?

The simple way is CAC divided by monthly gross profit per customer: ARPA × margin. Accounting for churn makes it longer: the calculator finds the month in which cumulative gross profit of the average acquired cohort exceeds CAC.

How do I calculate churn rate?

Count lost customers: customers at the start of the period plus new ones minus customers at the end. Divide by customers at the start. For example, (1,000 + 150 − 1,080) / 1,000 = 7%.

How do I convert monthly churn to annual?

Annual churn = 1 − (1 − monthly churn) to the 12th power. At 3% monthly churn, annual churn is about 30.6%, not 36%, because each month’s churn applies to a smaller base.

What is the difference between gross and net revenue churn?

Gross counts only lost revenue: churned customers and downgrades. Net subtracts expansion revenue from existing customers — upgrades and add-ons. Net can be negative, in which case NRR is above 100%.

Should salaries be included in CAC?

Yes, for people working on acquisition: marketing, sales and their tools. Without them CAC is understated and LTV:CAC overstated, especially for B2B products with a sales team.