ARPU
Average revenue per user (or account) per month.
Tool 07
LTV to CAC Calculator — Ratio + Payback Period
Quick check on whether ad spend (or sales CAC) is sustainable: lifetime value, the LTV∶CAC ratio, and how many months to earn back acquisition cost.
Churn
Share of customers who leave each month. Lower churn → longer lifetime → higher LTV.
CAC
What you spend to win one customer (ads, sales, onboarding).
Payback
Months of contribution margin to recover CAC. Shorter is kinder to cash.
Example
ARPU $49, churn 4%, CAC $200, margin 80% → LTV ≈ $980, ratio ≈ 4.9∶1, payback ≈ 5.1 months.
How do I calculate LTV to CAC?
LTV ≈ (ARPU × gross margin) ÷ monthly churn. Ratio = LTV ÷ CAC. Payback months ≈ CAC ÷ (ARPU × margin). Example: $49 ARPU, 4% churn, $200 CAC, 80% margin → LTV ≈ $980, ratio ≈ 4.9∶1, payback ≈ 5.1 months.
What is a good LTV:CAC ratio?
A common SaaS rule of thumb is ≥ 3∶1 (shown as a green Healthy Unit Economics badge). Below 3∶1 gets an orange High Acquisition Cost / Unhealthy badge. Payback under ~12 months is a second useful check.
Why include gross margin in LTV?
LTV should reflect contribution, not top-line revenue. Hosting and payment costs mean $49 of ARPU isn’t $49 of profit. Use 100% only if you want a revenue LTV on purpose.
Should I use monthly or annual churn for LTV?
This tool expects monthly churn. If you only know annual churn, approximate monthly ≈ annual ÷ 12 (rough; compounding is more precise).