LTV to CAC Payback Calculator
Turn ARPU, gross margin and churn into lifetime value and see how many months it takes to earn a customer back.
Result
How it is calculated
All monthly figures use the same currency. CAC is acquisition spend ÷ new customers. Monthly gross profit per customer is ARPU × gross margin ÷ 100. Expected lifetime in months is 100 ÷ monthly churn %, and LTV = monthly gross profit × lifetime. Then payback months = CAC ÷ monthly gross profit, LTV:CAC = LTV ÷ CAC, and ROI = (LTV − CAC) ÷ CAC × 100. The verdict says whether payback is shorter than the expected lifetime. ARPU must be above 0, margin between 0 and 100, churn above 0 and at most 100, and new customers above 0. The CAC here covers only the spend you enter; add any sales salaries to it yourself if you want a fully loaded figure.
Worked example
A subscription product has ARPU 49 per month, gross margin 80% and churn 4% per month; the company spent 30000 to win 100 customers. CAC = 30000 ÷ 100 = $300.00. Gross profit per month = 49 × 0.80 = $39.20. Lifetime = 100 ÷ 4 = 25.0 months, so LTV = 39.20 × 25 = $980.00. Payback = 300 ÷ 39.20 = "7.7 months". LTV:CAC = 980 ÷ 300 = 3.27 : 1 and ROI = (980 − 300) ÷ 300 = 226.67%. Since 7.7 is far below 25 months, customers repay their CAC before they churn.
Common mistakes
- Typing churn as a fraction (0.04) instead of a percent (4): the tool reads 0.04% and gives a lifetime of 2,500 months and an absurd LTV.
- Using annual churn with monthly ARPU; both must refer to the same month, otherwise the lifetime is overstated by up to twelve times.
- Entering revenue ARPU with a 100% margin: LTV is then based on revenue rather than gross profit, which flatters the ratio and shortens payback.
- Leaving out part of the acquisition spend (sales salaries, tools, agency fees); the tool divides only the number you enter, so CAC comes out too low.
- Entering 0 for acquisition spend and reading the 0.00 : 1 ratio as bad: with no spend the ratio has no meaning, even though the tool prints 0.00.
About this calculator
LTV:CAC compares customer lifetime value to customer acquisition cost, and this calculator builds LTV up from its components rather than asking you to guess it directly: LTV = (ARPU × gross margin) ÷ churn rate, since a customer’s lifetime revenue depends on how much they pay, how much of that is actual profit, and how long they stick around before churning.
SaaS investors and operators treat an LTV:CAC ratio around 3:1 as the traditional healthy benchmark — high enough to prove the business model works, but not so high that it signals under-investment in growth — and CAC payback period (how many months of gross margin it takes to earn back what was spent acquiring a customer) is the complementary metric that captures cash-flow risk a ratio alone misses, since a company can have a great LTV:CAC ratio on paper while still running out of cash if payback takes 18+ months. Board decks and fundraising materials for subscription businesses report both numbers side by side for exactly this reason, along with the resulting ROI on acquisition spend.
Enter your ARPU, gross margin, monthly churn rate, total acquisition spend and number of new customers, and this calculator derives your CAC (spend ÷ new customers), LTV, CAC payback period in months, LTV:CAC ratio and ROI in one step. For a fully loaded CAC, add sales salaries to the spend figure yourself.
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