CAC & LTV Calculator

Customer Acquisition Cost (CAC) is the total cost of acquiring one new paying customer. It includes all sales and marketing expenses — ad spend, sales team salaries, software, events, content production — divided by the number of new customers acquired in the same period. A lower CAC means you're acquiring customers more efficiently.

Customer Lifetime Value (LTV or CLV) is the total revenue — adjusted for gross margin — that a customer generates over their entire relationship with your business. The formula: LTV = Monthly ARPU × Customer Lifetime (months) × Gross Margin %. It tells you the maximum you can rationally spend to acquire a customer while remaining profitable.

The SaaS industry benchmark is 3:1 — for every S$1 spent acquiring a customer, you should generate S$3 in lifetime value. Below 1:1 means you're losing money on every customer. Between 1:1 and 3:1 is marginal — you're likely not growing sustainably. Top-performing SaaS companies often achieve 5:1 or higher, but very high ratios (>10:1) may indicate under-investment in growth.

The payback period is the number of months it takes to recover your CAC from a customer's gross profit contribution. Payback = CAC ÷ (Monthly ARPU × Gross Margin %). Investors want to see payback under 12 months for consumer products and under 18–24 months for B2B SaaS. A long payback period strains cash flow and increases risk.

Three levers: (1) Reduce CAC — improve conversion rates, invest in organic channels (SEO, referrals), tighten targeting. (2) Increase LTV — reduce churn (better onboarding, customer success), raise prices, expand ARPU through upsells. (3) Improve gross margin — reduce cost of goods sold, move toward higher-margin products. The highest-leverage move is usually reducing churn, which dramatically extends customer lifetime.

Include everything that drives customer acquisition: paid ads (Google, Meta, LinkedIn), sales team salaries and commissions, sales tools and CRM costs, marketing software, event costs, content production, and agency fees. Some companies also include a portion of customer success costs in CAC. Be consistent month-to-month so your trend data is comparable.