How do you calculate customer acquisition cost (CAC)?

CAC is your total sales and marketing spend over a period divided by the number of new customers won in that same period. If you spent $4,000 and won 20 customers, your CAC is $200.

What is a good LTV to CAC ratio?

A widely used rule of thumb is that a ratio around 3 to 1 is healthy: each customer is worth about three times what it cost to acquire them. Below 1 to 1 is unsustainable. Well above 5 to 1 can mean you are underspending on growth.

What is a good payback period?

Payback period is how many months of gross profit from a customer it takes to recover their acquisition cost. Under 12 months is generally considered comfortable for a small business, and under 6 months is strong.

Is the CAC and ROI calculator free?

Yes. It runs entirely in your browser, needs no sign-up, and uses standard unit-economics formulas, not estimates.

CAC and ROI calculator

Enter your marketing spend, new customers, and what a customer is worth. We will work out your customer acquisition cost, payback period, and LTV to CAC ratio, with a plain-English read on each.

The formulas

These are standard unit-economics formulas, not estimates. CAC is spend divided by new customers. Lifetime value is average order value times purchases per year times lifespan times gross margin. The LTV to CAC ratio is lifetime value divided by CAC. Payback period is CAC divided by the monthly gross profit a customer generates. The only judgement calls are the verdict thresholds, which use widely cited rules of thumb (a ratio near 3 to 1 is healthy, payback under a year is comfortable) and are labelled as such.

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CAC and ROI calculator

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