Free tool
Customer Lifetime Value Calculator
Find out what a customer is really worth, what you pay to win one, and whether your marketing is building profit or burning it.
Your customer
Your marketing
LTV : CAC
Very healthy. You can likely spend more to grow faster.
The orange tick marks the 3:1 target.
- Customer lifetime value
- $1,800
- Profit per customer over their lifetime
- Cost to acquire (CAC)
- $150
- Spend ÷ new customers
- Max CAC at 3:1
- $600
- The most you should pay per customer
- CAC payback
- 3.0 months
- Time to earn back acquisition cost
The formulas
- Lifetime value = order value × purchases per year × years retained × gross margin
- CAC = marketing spend ÷ new customers
- LTV:CAC = lifetime value ÷ CAC
- Payback = CAC ÷ yearly profit per customer, in months
Using it to set ad budgets
“Max CAC at 3:1” is the most you can pay for a customer and stay healthy. Use it as the target cost per acquisition in Google and Meta ads, and check it against our Ad ROI Calculator.
FAQs
What is a good LTV to CAC ratio?
3:1 is the common benchmark: each customer brings in three times what it cost to win them. Below 1:1 you lose money on every new customer; well above 5:1 you may be under-investing in growth.
Should I use revenue or profit for lifetime value?
Profit. This calculator applies your gross margin, so the result is what a customer actually contributes after the cost of delivering your product or service.
What counts in customer acquisition cost?
Everything you spend to win new customers in a period: ad spend, agency and freelancer fees, tools and sales commissions, divided by new customers in that period.
How can I raise lifetime value?
Bring customers back more often with email and SMS, add related products or memberships, and improve service so they stay longer.
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Want experts to do it for you?
Book a free strategy call. We'll audit your current marketing and show you exactly where the growth is.