CAC & LTV dashboard

Track the financial value of customer loyalty (CLTV) for cost-effective acquisition and improved brand profitability. Gain insights into ARPA, Churn Rate, and LTV-CAC ratio, as explained below.

Inputs

Please select your business size from the drop-down list below

Units
Revenue
$
Gross profit
$
Sales & Marketing expenses
$
Total customers ( start of year)
#
New customers
#
Total customers ( end of year )
#
Churn
%
Lost customers
#
Outputs
The formulas below will automatically calculate all indicators based on available inputs

Please note that we indicate benchmarks accordingly to the business size, and compare your results using color scales:

Units

The average income a company generates from each user or account in a year

Annual ARPU / ARPA
$

The predicted total revenue a company expects to earn from a customer throughout their entire relationship

Lifetime Value (LTV)
$

The cost a company incurs to acquire a new customer, including marketing and sales expenses.

Customer Acquisition Cost (CAC)
$
Units

Average CAC per customer / Average ARR per customer

Measures the number of months it takes for a company to recoup its investment in acquiring a new customer

CAC Payback vs. market benchmark
month

Company is facing challenges in acquiring customers cost-effectively or retaining them over the long term

Bad

Customer acquisition and retention strategies are moderately effective, but there may be room for improvement in optimizing costs and maximizing customer lifetime value

Good

Company efficiently acquires customers at a reasonable cost, resulting in a good return on investment over the customer’s lifetime

Best
12 6

Measures the relative value of a customer over their lifetime compared to the cost of acquiring that customer

LTV/CAC vs. market benchmark

Company is facing challenges in acquiring customers cost-effectively or retaining them over the long term

Bad

Customer acquisition and retention strategies are moderately effective, but there may be room for improvement in optimizing costs and maximizing customer lifetime value

Good

Company efficiently acquires customers at a reasonable cost, resulting in a good return on investment over the customer’s lifetime

Best
3 5

Why use a CLTV calculator?

A Customer Lifetime Value Calculator simplifies understanding your customer’s lifetime value and impact on your business. Among the most valuable insights a calculator provides are: 

  • LTV: CAC ratio shows the long-term profitability of your customer acquisition efforts and helps you assess if your current strategy is sustainable or where you can optimize your efforts.
  • Marketing budgets: Boost your marketing impact by focusing resources on channels that attract valuable customers. Set prices that align with long-term customer value and prioritize strategies to keep customers engaged and increase their overall value.
  • Benchmarking against the industry: Our calculator provides industry benchmarks for the LTV: CAC ratio so you can compare your performance to competitors and identify areas for improvement.

What is the Customer Lifetime Value?

Customer Lifetime Value is the average income a business expects from a customer for their entire relationship. What does CLTV stand for? This includes the first purchase, additional purchases, referrals, and cross-selling. 

LTV is a helpful tool to see how well your product is resonating with customers, pinpoint areas for improvement, and assess the long-term success of your business.

What’s the difference between CLV and LTV?

While there’s no significant difference between “CLV” and “LTV” (or CLTV), companies may choose one term over the other based on preference (ours is LTV). Some companies, however, differentiate LTV vs. CLTV in terms of granularity. In these cases, LTV—is the average customer lifetime value for the entire customer base, while CLV—is the value of an individual customer over its lifetime.

How to calculate the Customer Lifetime Value?

One of the simplest methods to calculate the CLTV is to divide the average gross profit each month from a typical customer by the monthly churn rate assumption.

Beyond numbers, calculating your CLV or LTV prompts a deeper reflection on the entire customer journey. Consider when, where, why, for how much, and how often customers make purchases. But one step at a time, let’s uncover the additional parts of the formula for LTV calculation:

Average Revenue Per Account (ARPA) Formula

ARPA—is an acronym for Average Revenue Per Account. Indicates average revenue generated by each customer account over a specific period, mainly used by subscription-based companies. This metric helps assess customer value, track growth, and inform business decisions.

SaaS Gross Margin Formula

SaaS Gross Margin—is the amount of profit remaining after subtracting the direct costs of the service, e.g., application hosting costs, new customer onboarding, customer service, and third-party software licences.

Churn Rate Formula

Churn reflects the percentage of customers who stop subscribing or using your service within a specific period.

Note: A “healthy” churn rate varies depending on your industry and business model. However, aiming for lower than 5% monthly churn is generally considered good.

How to calculate the Customer Acquisition Cost?

One of the simplest methods to calculate your Customer Acquisition Cost (CAC) is: Divide your total cost of sales and marketing by the number of new customers acquired in a specific period  (e.g., month, quarter, year).

What is the LTV/CAC Ratio?

The customer lifetime value (LTV) to customer acquisition cost (CAC) ratio—is a sign of profitability. This metric helps you understand whether you’re generating enough customer revenue to recoup your acquisition costs and make a profit. If this ratio is low, you’re burning money in the long run because if you spend more to acquire your customers than their expected return on revenue throughout the customer’s lifetime, you will eventually run out of resources to acquire any more customers.

LTV: CAC Benchmarks

The LTV: CAC ratio is like a health check for how well a company attracts and keeps customers. It compares what a customer is worth over time (LTV) to what it costs to get them (CAC). Here are some typical benchmarks for this ratio:

  • 3:1 Ratio

The ideal benchmark. A customer’s lifetime value is three times the cost to acquire them, which indicates that a company is spending wisely on customer acquisition and still achieving a healthy profit.

  • Below 3:1

Bad sign. This indicates overspending on customer acquisition compared to the value they bring and can result in cash flow issues that may not be sustainable in the long term.

  • Above 3:1

High LTV/CAC is excellent, but too high can be misleading! It might mean you’re not investing enough in acquiring new customers, potentially stunting growth.

What is a good customer lifetime value?

Customer lifetime value varies for each business and isn’t applicable across different ones. To assess the adequacy of your CLV, make sure your costs are lower than the CLV amount.

Note: A good LTV (Lifetime Value) means the earnings from a customer are at least 3 times more than what it costs to acquire them (CAC), ensuring profit and business growth. This value can be higher in industries where customers keep coming back.

FAQ

What is a good LTV to CAC ratio?

While there is no one-size LTV to CAC ratio for all industries, it is an excellent spot to aim for a 3:1 LTV/CAC ratio. If your LTV/CAC is below 3, consider reducing marketing expenses for sustainable acquisition efforts.

What does LTV/CAC mean?

The LTV to CAC ratio metric shows whether gaining customers is profitable by comparing their lifetime value to the cost of acquiring them.

What is a good LTV CAC ratio for SaaS?

A good customer value-to-cost ratio for SaaS businesses is between 3:1 and 5:1, earning three to five times what you spend to get a customer. A lower ratio could point to a product-market misalignment, while a higher ratio (above 5) suggests the potential for increased investment in sales and marketing. A ratio below 1 means lost revenue per customer.

What is the key to balancing CAC and LTV?

Balancing CAC and LTV means expanding into new markets, providing value-added products and services, reducing customer acquisition costs, and increasing customer lifetime value. After all, the critical point is to monitor and optimize both metrics regularly and adjust your tactics accordingly.

What qualifies as a high CLV value?

A high customer lifetime value is three times your customer acquisition cost. If your LTV/CAC ratio is lower than that, it can mean your business is losing money in customer acquisition, while a ratio of more than 3:1 can indicate that you’re not putting enough money into growth opportunities.

How to track and analyze CAC and LTV?

To track CAC and LTV effectively, use tools like CRM, analytics, or dashboards. Spreadsheets or online calculators work for simple calculations. Ensure consistency in data sources, review regularly, and act on gained insights.