Free tool

Free Customer Acquisition Cost Calculator

Calculate CAC, LTV, LTV:CAC ratio, and payback period in seconds. The four numbers every SaaS, subscription, and recurring revenue business needs to know whether growth is actually profitable.

Results

Unit economics

CAC —

LTV : CAC —

CAC

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LTV

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Metric	Value	Benchmark

How it works

Three steps from raw spend to honest unit economics

Pull spend from finance, customers from billing, lifespan from cohort data. Then ask whether your LTV:CAC clears 3.

```
marketing = $80,000
sales = $40,000
customers = 100
cac = $1,200
```
01
Total spend, total customers

Marketing plus sales spend over the same period as new customer count. Pull from finance and billing, not from the CRM.
CAC

LTV

4.0x

02
Compare LTV to CAC

LTV = ARPU × margin × lifespan. Above 3x CAC, the business has room to grow. Below 1x, every customer you sign is a loss.
$

Q2 unit economics

Healthy SaaS
- CAC $1,200
- LTV $4,800
- Payback 7.5 mo
03
Read payback period

Months until a customer pays back the cost of acquiring them. Under 12 is best-in-class SaaS. Over 24 strains cash flow.

Inputs explained

What goes into CAC and LTV (and what doesn't)

Three inputs drive CAC. Three more turn it into LTV and payback period. Skip the LTV inputs if you only want CAC.

Marketing spend

Everything spent on acquisition: paid media, agencies, content, events, marketing salaries, tooling. If it touches the funnel, it counts toward CAC.
- Ad spend
- Salaries
- Tools
- Events
Sales spend

Sales team cost: salaries, commissions, sales tooling, SDR/AE benefits. Optional. Skip it for self-serve businesses where there is no sales team.
- AE salaries
- Commissions
- Sales tools
New customers acquired

Count of paying customers added in the same period as the spend. Use billing data, not pipeline data. Pipeline opportunities are not CAC denominators.
- Period new MRR logos
Average revenue per customer (monthly)

Monthly recurring revenue per customer, or AOV times monthly purchase frequency. Used to compute LTV and payback period.
- $50/mo SMB
- $500/mo mid
- $2K+/mo ENT
Gross margin

Revenue minus cost of goods sold (hosting, support, payment processing, fulfillment) as a percentage. SaaS typically runs 70 to 85 percent. Ecom is much lower.
- 75 to 85% SaaS
- 30 to 50% ecom
Average customer lifespan

How many months the average customer pays before churning. Calculate as 1 / monthly churn rate, or pull from cohort data if you have 12+ months of history.
- 24 mo SMB
- 36 mo mid
- 60+ mo ENT

Best practices

Five rules for measuring CAC without lying to yourself

01
Track blended and paid CAC separately

Blended hides bad paid channels because organic subsidizes them. Paid alone hides shared costs. Track both, label them, and compare.
02
Include fully-loaded salaries, not just media

Marketing salaries, sales salaries, and tooling are real CAC. Excluding them produces a vanity number that does not match the P&L.
03
Cohort the math, do not blend periods

Q1 spend over Q2 customers makes CAC look better than it is. Use the same period for spend and customer count, every time.
04
Use gross margin LTV, not revenue LTV

Revenue LTV double-counts the costs of serving the customer. Gross margin LTV is the actual cash you have to pay back the CAC.
05
Watch payback before LTV ratio

Strong LTV:CAC with 36-month payback still strains cash. Payback is the cash flow constraint, ratio is the long-term profitability check.

Guide

How CAC, LTV, and payback period actually work

CAC alone tells you nothing

A $1,200 CAC is great if your LTV is $10,000 and disastrous if your LTV is $400. The number on its own is meaningless, which is why teams that obsess over driving CAC down often end up shipping unprofitable growth. CAC matters in a ratio to LTV and in absolute terms relative to your runway. Always report it with at least one of those.

The math, top to bottom

CAC      = (marketing_spend + sales_spend) / new_customers
LTV      = arpu_monthly * gross_margin * customer_lifespan_months
ratio    = LTV / CAC
payback  = CAC / (arpu_monthly * gross_margin)

LTV uses gross margin, not revenue, because revenue includes the cost of serving the customer (hosting, support, payment processing, fulfillment). Gross margin LTV is the actual cash available to pay back acquisition cost.

The 3:1 rule and where it comes from

The 3:1 LTV:CAC rule is a SaaS heuristic, not a law. The logic: 1x covers the acquisition cost, 1x covers ongoing operations and product investment, 1x is the actual margin left for the business. Anything below 3x and you are running on fumes. Above 5x can mean you are under-investing in growth and could spend more to acquire faster. The right ratio for your business depends on your gross margin (lower margins need higher ratio) and growth ambition (high-growth targets justify lower ratios short-term).

Why payback period matters more for cash-constrained businesses

A $5,000 CAC with $50,000 LTV is a 10:1 ratio, which sounds incredible. But if the LTV plays out over 5 years, you are out $5,000 in cash from day one and don't break even until year three. For a venture-funded company, that is fine. For a bootstrapped business, that is fatal. Payback period under 12 months is what keeps growth self-funding. Over 24 months and you need outside capital just to keep growing.

Realistic benchmarks by tier

Best-in-class SaaS: LTV:CAC 5:1+, payback under 12 months, 90%+ gross margin
Healthy SMB SaaS: LTV:CAC 3:1 to 5:1, payback 12 to 18 months, 70 to 80% margin
Mid-market SaaS: LTV:CAC 3:1, payback 12 to 24 months, 75 to 85% margin
Enterprise B2B: LTV:CAC 3:1, payback 18 to 30 months, 80 to 90% margin (long contracts compensate for slow payback)
Ecommerce subscription: LTV:CAC 2:1 to 3:1, payback 6 to 12 months, 30 to 50% margin

A worked example

You spend $80,000 on marketing and $40,000 on sales in Q2, for a total of $120,000. You acquire 100 new customers, so CAC is $1,200. Your customers pay $200/month at 80 percent gross margin and stay 30 months on average. LTV = $200 × 0.80 × 30 = $4,800. LTV:CAC = 4:1, which is healthy mid-market territory. Payback period = $1,200 / ($200 × 0.80) = 7.5 months, which is comfortable. Now drop ARPU to $80 (a shift to SMB) at the same costs and you are at LTV $1,920, ratio 1.6:1, and 18.75 months payback, which is the edge of unprofitable. Same go-to-market, very different unit economics, just because the customer is smaller.

FAQ

CAC and LTV, FAQ

What is Customer Acquisition Cost (CAC)?

CAC is the total cost to acquire a new paying customer. The formula is (marketing spend + sales spend) / new customers acquired in the same period. It tells you how much money you spent to get each new logo, which is half of the unit economics conversation. The other half is what those logos are worth (LTV).

What is a good LTV to CAC ratio?

The SaaS rule of thumb is 3:1. LTV should be at least 3x CAC for the business to be sustainable after accounting for ongoing operations costs. Above 5:1 might mean you are under-spending on growth. Below 3:1 means you are barely profitable per customer. Below 1:1 means you are losing money on every customer you acquire.

What is a good CAC payback period?

Best-in-class SaaS recovers CAC in under 12 months. 12 to 24 months is normal for mid-market. Over 24 months means cash flow gets tight and growth becomes capital-intensive. For SMB and self-serve, payback should land at 6 to 12 months. Enterprise can stretch to 18 to 24 months if LTV is large enough.

Should I use blended CAC or paid-only CAC?

Both, separately. Blended CAC (all marketing and sales spend over all customers) tells you your true unit economics. Paid CAC (just paid media spend over customers attributed to paid) tells you whether your paid channels are scaling profitably. Blended hides bad paid channels because organic subsidizes them. Paid-only hides shared costs. Track both, and label them clearly.

What costs should I include in CAC?

Everything that goes into acquisition: paid media, agency fees, content production, marketing salaries, marketing tooling, events, sponsorships, SDR salaries, AE salaries, sales commissions, sales tools. Some teams exclude content and brand because the payback is multi-year. That is reasonable for a 'paid CAC' view but distorts blended CAC. Pick a definition and apply it consistently.

How is LTV calculated?

LTV = average monthly revenue per customer × gross margin × average customer lifespan in months. For example: $200/mo ARPU × 80% margin × 30 months = $4,800 LTV. Lifespan can be calculated as 1 / monthly churn rate (so 5 percent monthly churn implies a 20-month average lifespan). For ecommerce, replace ARPU with average order value × purchase frequency.

Is this calculator free?

Yes. No signup, no email gate. We host it because the same teams trying to manage CAC need real attribution to know which channels actually deliver low-CAC, high-LTV customers, which is what SourceLoop does.