How this calculator works
CAC is what you spend to win one customer. LTV is the gross profit that customer brings over their lifetime. Together they tell you whether growth creates or burns value.
This calculator uses gross profit, not revenue, for LTV, which is the version investors and lenders take seriously.
Formula
Worked example
A brand spending ₹6 lakh a month to win 400 customers has a CAC of ₹1,500. Each customer orders three times a year at ₹1,400 and a 45% margin, so yearly gross profit is ₹1,890. With 45% yearly churn, LTV is ₹4,200 and LTV:CAC is 2.8×.
Things to watch
- Count salaries of the growth team and agency fees in CAC, not just ad spend.
- Measure churn from cohorts: what share of January’s buyers bought again within 12 months.
- Payback under 12 months makes growth much easier to fund.
Questions
What is a good LTV to CAC ratio?
Around 3× is a common benchmark. Below 1× you lose money on each customer.
Why use gross profit instead of revenue?
Revenue overstates what a customer is worth, because product, shipping and fees must be paid out of it.
How do I estimate churn without history?
Use repeat-purchase data from your first cohorts, and update the number every quarter.
Should I discount LTV?
For long lifetimes, yes. Money in year four is worth less than money today.
For planning and education only, not tax, legal or investment advice. Last reviewed 2026-10-31.