About the LTV:CAC Calculator — Business Guide
This free LTV:CAC Calculator is designed specifically for Indian users, using documented calculation methods, with source references shown where applicable. Rules and formulas are reviewed for the applicable current period; tax-year-specific rules are identified on the page. No sign-up, no download, and no charge — results are instant and displayed in Indian number format (lakhs and crores).
How to Use This Calculator
Enter your values in the input fields above and click the Calculate button. Results update immediately. You can modify any input and recalculate as many times as needed. All inputs are processed locally in your browser. Optional Save Setup stores the setup only in your browser; Share Setup creates a URL containing encoded setup values. See the Privacy Policy for details.
Formula and Calculation Method
The LTV:CAC Calculator uses the documented calculation method described on this page. Where rules, rates or thresholds can change, review the cited source and effective date shown here before relying on the result for an important decision.
Understanding Your Results
Results are estimates based on the inputs you provide. Actual outcomes can vary with the rules, rates, prices, biological conditions, or other assumptions that apply to your situation. Review the assumptions and effective date shown on this page before using a result for an important decision.
Why Use CalcuTools India
CalcuTools India is an independent, free calculator platform covering personal finance, income tax, salary, loans, investments, retirement planning, and health, with formulas and applicable rules checked against the stated methodology or primary/reference sources where applicable. We are not affiliated with any bank, insurance company, NBFC, or financial products distributor. Our calculators are free to use. Some pages may contain clearly labelled partner or affiliate offers; these do not affect the calculation result.
CalcuTools India · India-focused calculators · Updated September 2026 · About Us · How We Verify · Editorial Policy · Disclaimer
LTV:CAC Ratio — The Key Startup Health Metric
For subscription, SaaS, and recurring-revenue businesses, the ratio between Customer Lifetime Value (LTV) and Customer Acquisition Cost (CAC) is one of the most important indicators of business sustainability — investors and founders watch it closely.
Customer Lifetime Value (LTV)
LTV estimates the total gross profit a customer generates over their entire relationship with your business. It's calculated as: Average Monthly Revenue × Gross Margin % × Average Customer Lifetime (1 ÷ Monthly Churn Rate).
Customer Acquisition Cost (CAC)
CAC is simply your total sales and marketing spend divided by the number of new customers acquired in that period. It should include ad spend, sales team salaries, and marketing tool costs attributable to acquisition.
The 3:1 Benchmark
A widely-cited rule of thumb in the startup world: a healthy LTV:CAC ratio is 3:1 or higher — meaning each customer generates at least 3x what it costs to acquire them, leaving room for operating costs and profit. Below 1:1 means the business model loses money on every customer.
Frequently Asked Questions
What's a good payback period alongside LTV:CAC? +
Beyond the ratio, check how quickly you recover CAC — ideally within 12 months for most SaaS businesses. A great LTV:CAC ratio with a 3-year payback period still strains cash flow significantly.
Does this work for non-subscription businesses? +
The framework is designed for recurring revenue models. For one-time purchase businesses, a simpler comparison of average order value/margin against acquisition cost serves a similar purpose, though 'lifetime value' would need redefinition around repeat purchase behavior.
My churn rate is 0% — how do I calculate LTV? +
If churn is genuinely 0% (rare), lifetime value becomes theoretically infinite using this formula. In practice, use a realistic estimated customer lifetime (e.g., 36-60 months) directly instead of dividing by churn.
🔄 Last Updated: September 2026 · Rule year is shown where relevant; verify source-linked rules before filing or payment