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VERMA

Shalini Verma · AI Marketing Engineer · Toronto, Canada

Enquiries

CAC and LTV calculator

Unit economics on one screen. Enter a month of spend and new customers, plus revenue per customer, gross margin and churn, and see CAC, LTV, the LTV:CAC ratio and how many months it takes to earn back a customer.

CAC
$500
LTV
$4,000
LTV : CAC
8.0 : 1
CAC payback
4.2 months

Healthy: at or above the common 3:1 rule of thumb. LTV uses gross margin and assumes steady churn (an average life of 33.3 months).

How to use it

  1. Enter this month’s sales and marketing spend and how many new customers it brought in.
  2. Add monthly revenue per customer, gross margin and monthly churn.
  3. Read CAC, LTV, LTV:CAC and payback; adjust churn to see its effect.

Questions

How do you calculate CAC?

Customer acquisition cost is your sales and marketing spend for a period divided by the new customers won in that period. Include salaries, tools and agency fees, not only ad spend, or CAC will look better than it is.

How is LTV calculated here?

Lifetime value is monthly revenue per customer multiplied by gross margin, divided by monthly churn. Using gross margin rather than revenue keeps LTV comparable with CAC, which is a cost.

What is a good LTV to CAC ratio?

A ratio of about 3:1 is a widely used rule of thumb for subscription businesses, meaning each customer returns roughly three times what it cost to win. Treat it as a guide; your cash position and growth stage matter too.

What is CAC payback?

The number of months of gross margin from a customer needed to earn back what it cost to acquire them. Shorter payback means growth needs less cash up front.

Read the method

Field notes behind this tool.

Measurement4 min readCAC, LTV and Payback Explained, With a Worked ExampleHow to calculate customer acquisition cost, lifetime value, the LTV:CAC ratio and CAC payback, with a worked example and the benchmarks still used.
Measurement4 min readIncrementality and MMM With Google Meridian: A GuideHow Google's open-source Meridian MMM turns spend into ROI ranges per channel, and how geo holdouts calibrate it so budget moves on evidence.

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Introductions

By appointment. Full-time, contract or advisory.

Currently leading AI marketing at Imagera AI.Open to a select full-time role leading AI marketing or GTM engineering.Advisory and contract work by arrangement.

What would we explore?
Start a conversationRésumé (PDF)LinkedIn

Roles considered: AI Marketing Engineer · Lead · Head of Growth · AI products · GTM Engineering Lead

shaliniworks24@gmail.com · Toronto, Canada · Remote or hybrid across Canada and the US