LTV calculator (customer lifetime value and LTV:CAC)
Estimate customer lifetime value from revenue per account, gross margin and churn, and compare it with what a customer costs to acquire.
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Customer lifetime value (LTV)
$1,333
- Gross profit per account per month
- $40.00
- Average customer lifetime
- 33.3 months
- LTV:CAC ratio
- 4.4x
- CAC payback
- 7.5 months
At or above 3, the benchmark most SaaS investors and operators use.
Under 12 months, a common target for small SaaS.
This simple LTV assumes steady churn and no expansion revenue. Use gross profit, not revenue, so LTV compares fairly with CAC.
How it's calculated
- Gross profit per account per month = Average revenue per account (monthly) × Gross margin ÷ 100
- Average customer lifetime = 100 ÷ Monthly customer churn
- Customer lifetime value (LTV) = Gross profit per account per month × Average customer lifetime
- LTV:CAC ratio = Customer lifetime value (LTV) ÷ Customer acquisition cost (CAC)
- CAC payback = Customer acquisition cost (CAC) ÷ Gross profit per account per month
Explained in
- LTV (Customer lifetime value): Customer lifetime value estimates the gross profit a customer will generate before canceling. It compares segments well but is unreliable for young SaaS.
- LTV:CAC ratio: The LTV:CAC ratio compares what a customer is worth over their lifetime to what it cost to win them. A ratio above 3 is the usual target.
- CAC payback period: CAC payback period is the number of months of gross profit a new customer takes to repay what you spent to acquire them. Shorter means faster cash recovery.
- Unit economics: Unit economics measures the revenue and costs of a single unit, usually one customer, to show whether each sale makes or loses money.