What it costs to win one new customer: CAC from a single total or from itemised sales and marketing spend, how many months of gross profit pay that CAC back, and a simple lifetime value with the LTV:CAC ratio. Everything updates live in your browser; the defaults are the worked example.
The maths: CAC = total sales & marketing spend ÷ new customers acquired, with spend and customers measured over the same period.
Keep the period consistent: this month’s spend often wins next month’s customers, so a single odd month can swing CAC. A rolling quarter is usually the steadier read.
The maths: monthly gross profit per customer = ARPA × gross margin. Payback = CAC ÷ that monthly gross profit. Simple LTV = ARPA × gross margin × lifetime in months.
Benchmark, as guidance only: an LTV:CAC ratio around 3:1 is commonly cited as healthy — below 1:1 each customer loses money, and a very high ratio can mean you are under-investing in growth. It is a rule of thumb, not a target that fits every business or stage.
Customer acquisition cost from total or itemised spend, with CAC payback in months and a simple LTV:CAC bridge.
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Calculate customer acquisition cost from a period’s total sales and marketing spend — or itemise it into ad spend, salaries, tools and agency — then see how many months of gross profit pay the CAC back, and a simple lifetime value with the LTV:CAC ratio.
A company spends $84,000 on sales and marketing in a quarter — $50,000 of ad spend, $25,000 of salaries, $4,000 of tools and $5,000 on an agency — and wins 350 new customers: CAC is $84,000 ÷ 350 = $240. With ARPA of $49 a month at an 80% gross margin, each customer returns $49 × 0.8 = $39.20 of gross profit a month, so payback takes $240 ÷ $39.20 ≈ 6.12 months. Over a 25-month average lifetime the simple LTV is $49 × 0.8 × 25 = $980, an LTV:CAC ratio of $980 ÷ $240 ≈ 4.08 : 1.
CAC = total sales and marketing spend for a period ÷ new paying customers acquired in the same period; the itemised rows simply sum to that total. Monthly gross profit per customer = ARPA × gross margin (as a fraction) — payback and LTV deliberately use gross profit rather than revenue, because the direct cost of serving the customer is never available to repay acquisition spend. CAC payback in months = CAC ÷ monthly gross profit per customer. Simple LTV = ARPA × gross margin × average lifetime in months, with no discounting, expansion or upsell assumed. LTV:CAC = simple LTV ÷ CAC. Zero customers, zero margin or a zero CAC show a dash instead of a division by zero.
Everything spent to acquire the customers in the period: advertising, sales and marketing salaries (at least the acquisition share), agency and contractor fees, and the tools those teams use. The classic error is counting only ad spend, which can halve the apparent CAC. Whatever boundary you choose, keep it the same every period so the trend is meaningful.
The number of months of a customer’s gross profit needed to repay what they cost to acquire — here, CAC divided by monthly gross profit per customer. It is a cash-flow measure: a 6-month payback means every cohort ties up cash for half a year before it starts contributing, which decides how fast a business can afford to grow.
Around 3:1 is the commonly cited healthy benchmark — each customer returns about three times their acquisition cost in lifetime gross profit. Below 1:1 you lose money on every customer; far above 3:1 can signal under-investment in growth. Treat it as guidance, not a law: it varies by industry, stage and how honestly both numbers are measured.
Because revenue is not what repays acquisition spend — the direct cost of hosting, support and delivering the product comes out first. At an 80% margin a $49 ARPA contributes $39.20 a month toward payback; using the full $49 would flatter payback by a quarter and quietly break the plan built on it.
From churn: lifetime in months ≈ 1 ÷ monthly churn rate as a fraction, so 4% monthly churn implies about 25 months. Established businesses can measure it directly from cohort history; newer ones should use the churn estimate and revisit it as real retention data arrives.
Each result needs a non-zero base: CAC needs at least one new customer, payback needs gross profit above zero (a positive ARPA and margin), and the ratio needs a CAC above zero. Rather than divide by zero or print an infinite payback, the calculator shows a dash until the inputs can support the figure.
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