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CAC, LTV and payback
Three numbers tell you whether your growth pays: what a new client costs, what they bring in margin over their lifetime, and how long it takes to earn back the acquisition cost.
The starting values are examples: replace them with last month's figures or, better, the average of the last three.
Formulas: CAC = spend ÷ new clients; lifetime = 1 ÷ share of clients lost each month; LTV = monthly revenue × margin × lifetime; payback = CAC ÷ (monthly revenue × margin).
LTV to CAC ratio
11.3
- Customer acquisition cost (CAC)
- €1,500 excl. VAT
- Lifetime value in margin (LTV)
- €16,875 excl. VAT
- Average client lifetime
- 50 months
- CAC payback period
- 4.4 months
Commonly cited benchmarks for subscription businesses: an LTV at least three times the CAC, and an acquisition cost earned back in under twelve months.
David Skok, For Entrepreneurs, SaaS MetricsIndicative estimate, ahead of any quote: precise costing happens during a diagnostic.
These numbers give you a sense of scale. Costing happens during a diagnostic, Express or strategic depending on your size.