Customer lifetime value and CAC calculator
Compare what a customer is worth to your business with what it costs you to win one. A healthy business usually earns at least 3 times its acquisition cost.
How to use it
- You enter the data
- Smallo works it out
- You get the result
- Enter your average order value, purchases per year and how many years a customer stays.
- Enter your gross margin and the marketing spend for new customers in the same period.
- Read LTV, CAC and the ratio between them. A ratio below 1 means you lose money on each new customer.
Frequently asked questions
What is customer lifetime value (LTV)?
LTV is the gross profit you expect from a customer over the whole relationship: average order value times purchases per year, times years kept, times your gross margin.
What is CAC and what is a good ratio?
CAC is your marketing and sales spend divided by new customers. A common rule of thumb is an LTV to CAC ratio of at least 3 to 1. Treat it as a guide, not a fixed rule.