LTV, CAC, and payback
Whether you can afford your acquisition cost depends on what a customer is worth over time, not on the first order. This gives you the three numbers investors and finance teams ask for.
How the math works
- Gross profit per year = order value × purchases per year × gross margin
- Gross profit per month = gross profit per year ÷ 12
- Lifetime in months = 1 ÷ monthly churn (capped at 36 months when churn is not known)
- LTV = gross profit per month × lifetime in months
- LTV to CAC = LTV ÷ CAC
- Payback months = CAC ÷ gross profit per month
A ratio of 3 or better and a payback under 12 months is the usual bar for a healthy consumer or SMB business. Subscription businesses should use their real churn; one-time products should use the repeat rate.
Open this as a canvas
The same numbers, on a canvas with a node per step. Put your real pages in, let the Setup Assistant install tracking, and watch the forecast column turn into actuals.
Open this as a canvasPreview the matching templateOther calculators
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