Customer lifetime value calculator with CAC and payback
This customer lifetime value calculator works out how much gross profit a typical customer brings in over the whole relationship, then sets it against what it costs to win that customer. Enter average order value, how often customers buy, your gross margin and either a lifespan in years or a churn rate, plus your sales and marketing spend and the new customers it brought. You get CLV, customer acquisition cost (CAC), the LTV:CAC ratio, the CAC payback period and the most you can afford to pay per customer.
It is built for online stores, subscription boxes and service businesses. All calculations run in your browser. Here CAC means customer acquisition cost, not the medical coronary calcium score. The results are planning estimates, not financial advice.
How to use the Customer Lifetime Value (CLV) & CAC Calculator
- Choose a currency and enter your average order value, orders per customer per year and gross margin.
- Pick Fixed lifespan and enter years, or Churn rate and enter the share of customers lost per year or per month, with a discount rate.
- Enter the sales and marketing spend for a period and the number of new customers it produced.
- Read CLV, the LTV:CAC ratio and payback, and check the year-by-year table to see when a customer pays back.
Customer Lifetime Value (CLV) & CAC Calculator features
Two CLV methods
The simple AOV × frequency × lifespan × margin formula, or a churn-based model with discounting.
Monthly or yearly churn
Monthly churn is converted to annual retention as (1 − monthly churn)^12, so subscription numbers work too.
CAC from your spend
Customer acquisition cost = sales and marketing spend ÷ new customers.
Ratio and payback
LTV:CAC as “x : 1”, months to earn back CAC from gross profit, and the CAC that gives 3 : 1.
Year-by-year profit
Survival-weighted, discounted profit per acquired customer with the payback year highlighted.
Customer lifetime value calculation formulas
Simple CLV = AOV × purchase frequency × lifespan × gross margin. With a $60 average order, 4 orders a year, 3 years and a 40% margin: $60 × 4 = $240 of revenue a year, $96 of gross profit, and $288 over the lifetime ($720 of revenue).
Churn-based CLV = m ÷ (c + d), where m is gross profit per customer per year, c the annual churn rate and d the discount rate. It assumes each year’s profit arrives at the end of the year and a customer who is still active stays for another year with probability 1 − c. With m = $96, 30% churn and a 10% discount rate, CLV = 96 ÷ 0.40 = $240. With no discounting it reduces to m ÷ c, the same as the simple formula with a lifespan of 1 ÷ c years (3.33 years here).
CAC = sales and marketing spend ÷ new customers. $5,000 bringing 100 customers is $50 each. LTV:CAC = CLV ÷ CAC = 288 ÷ 50 = 5.76 : 1. CAC payback = CAC ÷ monthly gross profit per customer = 50 ÷ 8 = 6.25 months.
Reading the LTV:CAC ratio
Pair it with the ROAS calculator for campaign-level returns and the e-commerce conversion rate calculator to see where acquisition cost comes from.
| LTV : CAC | What it usually means |
|---|---|
| Below 1 : 1 | Each new customer loses money over their lifetime. |
| 1 : 1 to 3 : 1 | Profitable on gross margin, but thin once overheads are paid. |
| Around 3 : 1 | A widely quoted rule of thumb for a healthy balance — a convention, not a law. |
| Well above 5 : 1 | Strong unit economics; you may be under-investing in growth. |
Pitfalls
- Use gross profit, not revenue, when comparing with CAC — a revenue-based LTV makes every ratio look better than it is.
- Count all acquisition costs: ad spend, agency fees, discounts for first orders and sales salaries.
- Measure churn on a cohort of customers acquired at the same time; an average across old and new customers hides the early drop-off.
- Lifespan and churn are forecasts. Recalculate as real cohort data comes in.
Customer Lifetime Value (CLV) & CAC Calculator FAQ
How do you calculate customer lifetime value?
Multiply average order value by purchases per year, by the years a customer stays, by your gross margin. Or divide annual gross profit per customer by the churn rate plus a discount rate.
What is a good LTV to CAC ratio?
About 3 : 1 is a common rule of thumb. Below 1 : 1 you lose money on every customer; far above 5 : 1 may mean you could spend more on growth.
How do I calculate customer acquisition cost?
Divide total sales and marketing spend for a period by the number of new customers won in that period.
What is the CAC payback period?
The months of gross profit a customer needs to repay what it cost to acquire them: CAC ÷ monthly gross profit per customer.
Should CLV use revenue or profit?
Profit. This calculator reports lifetime revenue for reference but compares gross-profit CLV with CAC.
How do I turn monthly churn into yearly churn?
Annual retention is (1 − monthly churn) to the power 12; annual churn is one minus that. 3% a month is about 30.6% a year.