Check whether your unit economics are investor-grade — LTV, CAC ratio and payback.
Customer lifetime is derived from churn (1 ÷ churn rate). LTV is margin-adjusted.
Rule of thumb: LTV:CAC ≥ 3× and payback under 12 months is investor-grade.
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LTV:CAC compares the value a customer brings over their lifetime (LTV) with the cost to acquire them (CAC). Margin-adjusted LTV is the monthly revenue per customer times gross margin, divided by your churn rate; the ratio against CAC tells you whether your unit economics actually work.
This calculator gives you LTV, the LTV:CAC ratio with a health verdict, and your CAC payback period — the number of months it takes to earn back what you spent acquiring a customer.
Enter ARPU, gross margin and monthly churn.
Add your customer acquisition cost (CAC).
See LTV, LTV:CAC ratio and payback period.
Aim for ≥ 3× and payback under 12 months.
A ratio of 3:1 or higher is generally considered healthy and investor-grade. Around 1:1 means you barely break even, and below 1:1 you lose money on each customer.
A common formula is LTV = (ARPU × gross margin) ÷ churn rate. The tool derives average lifetime from churn (1 ÷ churn rate) and multiplies by the monthly gross-margin contribution.
It's how many months of gross-margin contribution it takes to recover the cost of acquiring a customer. Under 12 months is usually considered strong.
Because revenue isn't profit. Adjusting LTV for gross margin reflects the actual cash a customer contributes after delivering the product or service.