Turns the price, margin, churn and acquisition cost of a subscription or repeat-purchase business into customer lifetime value (LTV), the LTV to CAC ratio and the payback period, with every step shown. For founders and marketers who want to know whether growth pays for itself.
How to use it
Enter the figures per customer as your billing and ad accounts report them. The result updates as you type, and nothing leaves your browser.
- Pick your currency and enter the average revenue one customer pays each month.
- Enter your gross margin on that revenue and the share of customers you lose each month (monthly churn).
- Enter your customer acquisition cost (CAC): total sales and marketing spend divided by the new customers it won in the same period.
- Read LTV, the LTV to CAC ratio and the payback period, then check the findings and open Show the math to see each step.
How Reavlo tests this
The calculator uses the standard simple customer-lifetime model, run in your browser. Every step is listed under Show the math.
- Monthly profit per customer = monthly revenue × gross margin.
- Expected lifetime in months = 1 ÷ monthly churn. This assumes churn stays the same every month.
- LTV = monthly profit × expected lifetime.
- LTV to CAC = LTV ÷ CAC.
- Payback in months = CAC ÷ monthly profit: how long a customer's profit takes to earn back what it cost to win them.
Amounts are in major units of the currency you pick (ISO 4217) and rounded to 2 decimals; ratios and months are rounded to 4 decimals. Rates are stored as 0 to 1 and shown as percentages. Churn of 0 is not accepted, because a customer who never leaves has no finite lifetime to calculate.
Findings. Two rules run on the result.
- UEC-01, LTV to CAC below 1 (critical). A customer is expected to bring back less profit over their lifetime than they cost to acquire, so each new customer loses money. The line at 1 follows from the definition; it is not an industry benchmark.
- UEC-02, payback longer than 12 months (warning). Acquisition cost stays tied up for more than a year. The 12 months is a planning horizon chosen by Reavlo, not a published benchmark: set it against your own cash position and how long customers stay.
Reavlo does not show a target ratio such as "3 to 1", because no source we could cite supports one number for every business.
Limits. Constant churn is a simplification: real churn is usually higher in the first months, which makes the lifetime here optimistic. Revenue is treated as flat, with no expansion or discounting. CAC should include all the sales and marketing cost of winning the customers, and gross margin only the costs of serving them.
Questions
What is a good LTV to CAC ratio?
Below 1 a customer costs more than they bring back, and that is the one line this calculator marks. Beyond that it depends on your margin, growth rate and cash, so compare it with your own history rather than a single target.
How do I find my monthly churn?
Divide the customers you lost in a month by the customers you had at the start of that month. If you only know annual churn, use the monthly figure that compounds to it, or average several months.
What counts in CAC?
All the sales and marketing spend of a period, including ad spend, tools and salaries, divided by the new customers won in that period. Leaving costs out makes the ratio look better than it is.
Why is the payback period shown separately from the ratio?
A high ratio can still be slow to pay back, and slow payback ties up cash. The ratio measures how much a customer is worth in total; payback measures how soon you get the acquisition cost back.