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CAC, LTV and marketing return

Find out what it costs to win each customer (CAC), how much profit they leave while they keep buying (LTV), how many months marketing takes to pay back and how much you can spend per customer. For stores, recurring services, subscriptions, gyms, clinics and e-commerce.

Educational simulation. Not investment advice. Results are estimates based on the data you enter and do not replace advice from a qualified professional.

Reviewed on Oct 31, 2026

Example values for a subscription service. Use the average of the last 3 to 6 months.

Monthly spend to win customers
Funnel
Customer value

Customers lost: those who canceled or stopped buying in the month ÷ active customers at the start of the month. The common rule of thumb is LTV at least 3 times CAC and payback within 12 months.

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—LTV ÷ CAC
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How many months each customer takes to pay back the cost of winning them

Cumulative margin a new customer leaves, already accounting for the chance they cancel each month, compared with CAC.

Tap the chart to see the values.

24-month projection with the same spend

Active customers and the monthly result: margin from all customers minus marketing and sales spend.

Tap the chart to see the values.

LTV ÷ CAC by churn and acquisition cost

Green from your target up. Reducing churn is often worth more than making ads cheaper.

Metrics

The summary lists your inputs, results, formulas, assumptions and sources. The full report also includes the charts and interpretations, in color. In the print dialog, choose Save as PDF.

Method, assumptions and sources

Formulas

CAC = monthly marketing and sales spend ÷ new customers in the month
Monthly margin per customer = order value × purchases per month × contribution margin
LTV = monthly margin ÷ (churn + discount rate)
Payback: month in which expected cumulative margin exceeds CAC

Assumptions and limits

  • Educational simulation. LTV adds up the expected margin of every month, weighted by the chance the customer stays and brought to today’s value; without discounting it equals monthly margin × average lifetime (1 ÷ monthly churn).
  • The projection assumes constant spend, conversion and churn. It ignores referrals, rising order values over time and seasonality.
  • Averages; results vary by channel, campaign and customer profile.

Official sources and references

  • Farris, P. et al. Marketing Metrics: The Manager’s Guide to Measuring Marketing Performance (customer lifetime value). Pearson.
  • Gupta, S. and Lehmann, D. (2003). Customers as assets. Journal of Interactive Marketing.
  • U.S. Small Business Administration, marketing and sales

Frequently asked questions

What are CAC and LTV?

CAC is what it costs to win a new customer: monthly marketing and sales spend divided by new customers. LTV is the contribution margin a customer leaves while they keep buying. Comparing the two shows whether marketing creates value and how much you can spend per customer.

What goes into CAC?

Everything spent to win new customers: ads, agency, tools, content production and the part of the sales team and commissions devoted to new customers. Leaving the team out is the most common mistake and makes CAC look much lower than it is.

How do I read the default example?

With $8,000 a month in marketing and sales, 800 leads and a 5% conversion rate, the business wins 40 customers a month at a $200 CAC. Each customer pays $60 a month with a 60% margin and stays about 25 months: LTV at present value is $720, or 3.6 times CAC. The CAC pays back in month 7, and CAC could go up to $240 while keeping the 3× target.

What is a good LTV to CAC ratio?

The common reference is 3 or more, with CAC payback within 12 months. Below 1, each customer loses money. Far above 5 may mean you are underinvesting in growth. The right level depends on your cash position and how fast you want to grow.

How do I measure churn?

Customers who canceled or stopped buying in the month divided by active customers at the start of the month. For non-subscription businesses, define an inactivity period (for example, no purchase in 90 days) and count those customers as lost.

Why use a discount rate in LTV?

Because margin earned two years from now is worth less than margin today: money has a cost and the future is uncertain. The discount rate brings future months to present value. At 0%, LTV is simply monthly margin times the average customer lifetime.

What does the projection leave out?

Referrals, price increases, upsells, seasonality and changes in conversion as spend grows. It also ignores the business’s other fixed costs: the monthly result shows only customer margin minus marketing and sales spend.

Related calculators

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CAC and LTV: how much to spend to win each customer

Two numbers decide whether marketing creates or destroys value: what it costs to win a customer (CAC) and how much margin that customer leaves while they keep buying (LTV). Comparing them shows how far you can push growth.

Customer acquisition cost (CAC)

CAC = monthly marketing and sales spend ÷ new customers in the month. Include ads, agency, tools, content and the part of the sales team and commissions dedicated to new customers. Leaving costs out makes CAC look cheaper than it is.

Customer lifetime value (LTV)

LTV = monthly margin per customer ÷ (monthly churn + discount rate). Monthly margin is order value × purchases per month × contribution margin. Without a discount rate, it is the same as monthly margin × average lifetime (1 ÷ churn).

Reference values

  • LTV ÷ CAC of 3 or more: the common reference for healthy marketing.
  • CAC payback within 12 months: the business gets its cash back fast enough to reinvest.
  • LTV ÷ CAC far above 5: may mean you are underinvesting and growing more slowly than you could.

Retention is often the best lever

Cutting churn raises LTV and, at the same time, the size of the customer base. In many businesses, keeping a customer costs much less than winning a new one. Before raising the marketing budget, look at why customers leave.