Add your marketing and sales spend and new customers to instantly get your CAC, lifetime value, LTV:CAC ratio, and payback period in months — no email required.
Results update live as you type
For LTV & payback
The formula: CAC = (Marketing + Sales Spend) ÷ New Customers. All figures are estimates for planning purposes.
8.4 : 1 — healthy. You may have room to invest more aggressively in growth. A ratio above 3:1 is healthy, while roughly 1:1 means you're breaking even.
LTV here is gross-margin lifetime value: revenue × lifespan × gross margin.
Payback period uses monthly gross-margin revenue per customer.
Include all fully-loaded marketing and sales costs for an accurate CAC.
CAC, LTV, and payback are the core of sustainable growth. Here's what each one means and how they fit together.
Customer acquisition cost is the total marketing and sales spend required to win one new customer over a period — the price tag of growth.
Roll in ad spend, salaries, commissions, agency and tool costs, and creative. A "fully-loaded" CAC is far more honest than ad spend alone.
Lifetime value is the gross-margin revenue a customer generates over their whole relationship: monthly revenue × lifespan × gross margin.
A healthy LTV:CAC ratio is around 3:1 — three dollars of value for every dollar spent acquiring. Below 1:1 you lose money; very high can mean underinvesting.
How many months a customer takes to repay their acquisition cost from gross-margin revenue. Shorter payback frees up cash to reinvest in growth.
Lift funnel conversion rates, lean into your best channels, build referral loops, sharpen targeting, and improve retention so efficiency compounds.
CAC is only interpretable next to what a customer is worth over their lifetime.
Customer acquisition cost is total sales and marketing spend divided by the number of new customers it produced. Unlike cost per lead, it counts only customers who actually bought, which makes it the most honest efficiency number most businesses have — and the one most often calculated too generously.
The common error is counting only ad spend. A defensible CAC includes agency or staff cost, tooling, creative production, and any sales time spent converting the lead. If your reported CAC only contains the platform invoice, it is understating reality by a wide margin.
| Ratio | Verdict | What to do about it |
|---|---|---|
| Below 1:1 | Losing money on every customer | Stop scaling immediately. Fix pricing, margin or targeting before spending more. |
| 1:1 – 2:1 | Marginal | Covers direct cost but rarely overheads. Usually not a durable business. |
| 3:1 | Healthy | The widely used benchmark for sustainable growth. Reinvest with confidence. |
| 4:1 – 5:1 | Strong | Efficient, but may signal underinvestment — you can likely buy more growth. |
| Above 5:1 | Probably underspending | You are leaving volume on the table. Test raising budget until the ratio drifts toward 3:1. |
A very high ratio is not automatically good news. It usually means demand is being harvested rather than created, and that a competitor with a lower ratio is buying the growth you are declining.
Ad spend, management fees, salaries, software, creative production and sales time all belong in CAC. Excluding them produces a number that flatters the channel and misleads the budget.
For subscription businesses, how fast CAC is repaid matters more than the ratio. Under twelve months is generally healthy; beyond eighteen creates real cash-flow strain.
Blended CAC divides all spend by all customers, including organic and referral. Paid CAC isolates what you buy. Track both — blended flatters, paid decides.
Doubling spend rarely doubles customers. The marginal CAC on the next dollar is always higher than the average, which is what makes scaling decisions difficult.
Improving retention raises LTV, which raises how much you can afford to spend. It is often the cheapest way to fix an unworkable ratio.
A single account CAC hides the truth. Brand search will always look cheap; cold prospecting will always look expensive. Judge each on its own role.
CAC divides by customers acquired, not enquiries received. Using leads inflates apparent efficiency by whatever your close rate is.
A $40 CAC is excellent for a $600 product and fatal for a $50 one. The number is only readable next to price and margin.
LTV built on a hoped-for retention curve rather than observed data will justify almost any CAC. Use actual cohort data, even if the history is short.
Cold channels start expensive and improve as the algorithm learns and creative iterates. Assessing CAC in week two usually kills channels that would have worked.
If your ratio is under 3:1, there are only three levers: reduce acquisition cost, raise the average order value, or keep customers longer. Most businesses reach for the first and get the least from it. Pricing and retention are slower to move but compound, and they raise the ceiling on every future campaign rather than shaving a few percent off this one.
We help businesses across Canada cut acquisition costs and improve LTV:CAC with smarter paid media. No long-term contracts.