CAC Calculator →
Calculate the true cost to acquire a paying customer and determine how many months it takes to recover your sales and marketing investments.
How It Works
Combines Average Revenue Per User (ARPU), gross margin percentage, and customer churn rate to calculate the net discounted lifetime value of an account.
Formula & Technical Methodology
LTV = (ARPU · Gross Margin %) / Customer Churn Rate.
When Should You Use This Tool?
Setting maximum acceptable customer acquisition costs (CAC) and optimizing pricing tiers.
Practical Example
With $100 monthly ARPU, 80% gross margin, and 2.5% monthly churn: LTV = ($100 · 0.80) / 0.025 = $3,200 per customer.
Frequently Asked Questions
- Why must gross margin be included in LTV calculations?
- Revenue LTV overstates real profit. Margin-adjusted LTV reflects the actual gross profit available to repay acquisition expenses.