Customer Profitability Calculator
Find out if your customers are actually profitable.
Quick start: Find out if you're spending the right amount to acquire customers. A healthy business makes 3x more from customers than it costs to get them.
Running ecommerce ads? Try our Meta Ads Unit Economics Calculator for a more detailed per-order profitability breakdown.
Customer Acquisition Cost (CAC)
Include ads, sales team salaries, software, events - everything you spent to get customers
Count only paying customers in the same time period as your spend above
Lifetime Value (LTV)
Example: If your average order or invoice is $350, enter 350
Example: Quarterly purchases = 4, monthly subscriptions = 12
Example: If customers typically stay for 2-3 years, enter 2.5
Your Unit Economics
Here's how your customer acquisition efficiency stacks up.
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Customer Acquisition Cost
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Lifetime Value
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LTV:CAC Ratio
Benchmark: A healthy LTV:CAC ratio is typically 3:1 or higher. This means for every $1 spent on acquisition, you generate $3 in customer lifetime value.
Understanding CAC vs LTV
Customer Acquisition Cost (CAC) and Lifetime Value (LTV) are the two most important unit economics metrics for any business. Together, they tell you whether your growth is sustainable.
The formulas are:
CAC = Total Marketing Spend ÷ New Customers
LTV = Avg Purchase x Purchase Frequency x Customer Lifespan
The 3:1 rule
The widely accepted benchmark is that your LTV should be at least 3 times your CAC. This ratio accounts for operational costs, overhead, and profit margin. A ratio below 1:1 means you are losing money on every customer. Between 1:1 and 3:1, you are likely breaking even after factoring in other business costs.
How to improve your ratio
Reduce CAC:
- Improve your ad targeting to reach higher-intent audiences
- Invest in SEO and content marketing for lower-cost organic leads
- Optimise your conversion funnel to convert more visitors into customers
Increase LTV:
- Improve customer retention with better onboarding and support
- Increase purchase frequency through email marketing and loyalty programmes
- Raise average order value with upsells, cross-sells, and premium tiers
Want to understand how many customers you need to break even on your ad spend? Try our Break-even Calculator.
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