How this calculator works
| Metric | Formula |
|---|---|
| LTV | monthly revenue × gross margin ÷ monthly churn |
| LTV:CAC | LTV ÷ CAC |
| Simple CAC payback | CAC ÷ (monthly revenue × gross margin) |
| Churn-adjusted payback | first month where Σ monthly gross profit × (1 − churn)^(month − 1) ≥ CAC |
Worked example
With these inputs:
- Currency: USD ($)
- Customer acquisition cost (CAC): 1,200
- Monthly revenue per customer: 150
- Gross margin: 75%
- Monthly churn: 2.5%
LTV:CAC ratio: 3.8:1. LTV is $4,500 against a CAC of $1,200 — an LTV:CAC ratio of 3.8:1, with CAC paid back in 10.7 months.
| Customer lifetime value (gross profit) | $4,500 |
|---|---|
| CAC payback (simple) | 10.7 months |
| CAC payback (churn-adjusted) | 13 months |
| Monthly gross profit per customer | $113 |
| Churn needed for 3:1 | 3.13% a month |
| Maximum CAC for 3:1 | $1,500 |
Open this example in the calculator
Reading the two numbers together
| LTV:CAC | Payback | What it usually means |
|---|---|---|
| Above 3:1 | Under 12 months | Efficient growth — invest more |
| Above 3:1 | Over 12 months | Profitable but cash-hungry — push annual plans |
| 1:1 to 3:1 | Any | Fix churn, pricing or acquisition cost before scaling |
| Below 1:1 | Any | Every customer loses money |
| Far above 5:1 | Very short | Possibly under-investing in growth |
Levers that improve unit economics
- Lower churn — it raises LTV directly and is often the biggest lever.
- Raise prices or add paid tiers to lift revenue per customer.
- Improve gross margin through cheaper hosting and support automation.
- Shift acquisition to channels with lower CAC, such as SEO and referrals.
- Sell annual plans paid up front to shorten cash payback.
Open this calculator with your numbers
Every option can be set in the web address, so you can bookmark a scenario or send it to a colleague. AI assistants such as ChatGPT, Gemini, Claude and Perplexity can use the same parameters to open this calculator with your numbers and the result already on the page.
| Parameter | What it sets | Accepted values |
|---|---|---|
currency |
Currency | one of USD, INR, AED, GBP, EUR |
cac |
Customer acquisition cost (CAC) | number from 0 to 100000000 (in the chosen currency), default 1200 |
arpa |
Monthly revenue per customer | number from 0 to 10000000 (in the chosen currency), default 150 |
margin |
Gross margin | number from 1 to 100 (%), default 75 |
churn |
Monthly churn | number from 0.01 to 100 (%), default 2.5 |
Also available as plain text for AI assistants and a free JSON API (OpenAPI spec).
Last reviewed by the Infikey Technologies team.
Disclaimer
This calculator is provided free for general information and planning only. Results are estimates based on the inputs you enter and the assumptions described on this page, reference data such as published prices may change, and actual costs and outcomes will differ. Nothing on this page is financial, legal, tax, investment or other professional advice. Infikey Technologies Private Limited, Infikey Technologies LLC and their directors, employees and affiliates make no warranty, express or implied, about the accuracy, completeness or suitability of this tool or its results, and accept no liability for any loss or damage, direct or indirect, arising from its use or from reliance on its results. Verify all figures independently and seek professional advice before making any decision. Use of this tool is at your own risk.