Number of Months to Forecast
The total duration, in months, over which you want to project your campaign's cumulative revenue and profit.
LTV to CPA Ratio Calculator
Calculate your Customer Lifetime Value (LTV) and Customer Acquisition Cost (CPA/CAC) to find your LTV:CPA ratio, the most critical metric for long-term business health and true ROI.
Scenario A
Campaign Budget & Performance
Lead & Sales Funnel
Customer Value Metrics
Forecasting Period
How to Measure Your Business Health with LTV and CPA
This strategic tool goes beyond simple monthly forecasts to help you understand the true, long-term profitability of your marketing. It calculates the full lifetime value of a customer and compares it to the cost of acquiring them.
Step 1: Model Your Initial Acquisition Funnel
First, fill in your standard campaign metrics: Ad Spend, CPC, Conversion Rates, and Average Order Value. This calculates your monthly performance and, most importantly, your Cost Per Acquisition (CPA) – the cost to get one new customer.
Cost Per Acquisition (CPA) = Total Ad Spend / Total Monthly Sales
Step 2: Determine Customer Lifetime Value (LTV)
This is the most crucial input for long-term analysis. Enter the Average Customer Lifetime (in months). The calculator uses this, along with your AOV and up-sell rates, to predict the total revenue you'll generate from a single customer over their entire relationship with you.
Customer Lifetime Value (LTV) = Monthly Revenue Per Customer × Customer Lifetime
Step 3: Analyze the LTV to CPA Ratio and True ROI
The calculator compares the LTV to the CPA to give you the ultimate health score for your business model. This is often called the LTV to CAC ratio. While a simple ROAS looks at short-term revenue, this ratio determines if your customer acquisition strategy is truly profitable over the long term. It answers the question: 'Is what I'm spending to get a customer worth it?
True ROI (%) = ((LTV - CPA) / CPA) * 100
FAQs
A good LTV to CPA ratio is considered to be 3:1 or higher. This is often called the 'golden ratio' for sustainable businesses, as it means you generate $3 in lifetime value for every $1 spent on acquiring a customer, leaving enough margin for profit and operational costs.
Want a deep dive? Read our Ultimate Guide to the LTV:CPA Ratio.
ROAS (Return On Ad Spend) is a short-term metric that measures gross revenue from a single campaign against its ad spend. True ROI, derived from the LTV:CPA ratio, is a long-term, strategic metric that measures the total lifetime profit from a customer against the cost of acquiring them.
Understanding LTV is key to making informed decisions. It tells you exactly how much you can afford to spend to acquire a new customer and still be profitable. Businesses with a high LTV can afford to be more aggressive with their marketing spend, enabling faster growth.
LTV is most commonly calculated based on revenue for marketing purposes. While a more complex financial analysis might use gross profit (revenue minus COGS), revenue-based LTV is the standard for quickly evaluating the effectiveness of your customer acquisition channels.
CPC (Cost Per Click) is the price for a single ad click. CPA (Cost Per Acquisition) is the total cost to acquire one paying customer, which includes the cost of all the clicks and conversions needed to make the sale. This calculator uses your CPC to determine your final CPA.
Key Terms for this Calculator
Average Customer Lifetime
The average number of months a person continues to be a paying customer. This is essential for calculating the total value a customer will bring to your business.
Customer Lifetime Value (LTV)
The total revenue you can reasonably expect from a single customer account throughout their entire relationship with your company.
Cost Per Acquisition (CPA)
The total average cost to acquire one new paying customer through your marketing funnel.
LTV to CPA Ratio
A critical ratio comparing the lifetime value of a customer to the cost of acquiring them. A ratio of 3:1 is considered a healthy benchmark for sustainable growth.
True Return on Investment (ROI)
A percentage that represents the total lifetime profit generated from a single customer, relative to the cost of acquiring that customer. It provides the most accurate view of marketing profitability.
Customer Acquisition Cost (CAC):
A synonym for CPA, representing the total cost associated with acquiring a new customer. Often used interchangeably in SaaS and e-commerce industries.