Free Tool · Growth

CAC & LTV Calculator: how much can you afford to spend to win a customer?

The single most important number in growth is your LTV:CAC ratio. If a customer is worth far more than they cost to acquire, you can spend aggressively and grow fast. Enter your numbers to find out where you stand.

Acquisition
Customer value
CAC
AED 250
Cost to acquire one customer
LTV
AED 1,350
Lifetime profit per customer
LTV : CAC
5.4 : 1
CAC payback
4.4 mo
Time to recover CAC
Healthy. At 5.4:1, each customer is worth well over what they cost, you can likely afford to grow faster.

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A healthy LTV:CAC ratio is around 3:1. Below 1:1 you lose money on every customer. Above 5:1 you're probably under-investing in growth and leaving market share on the table.

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Frequently asked questions

How do you calculate CAC?

Customer acquisition cost is your total sales and marketing spend for a period divided by the number of new customers you acquired in that period. If you spent AED 10,000 and gained 50 customers, your CAC is AED 200.

How do you calculate customer lifetime value (LTV)?

A simple LTV is average order value multiplied by purchase frequency per year, multiplied by the average customer lifespan in years, multiplied by your gross margin. This tells you the total profit a typical customer generates over their relationship with you.

What is a good LTV:CAC ratio?

Around 3:1 is considered healthy for most businesses. It means each customer is worth three times what you paid to acquire them. A ratio under 1:1 is unsustainable, while a very high ratio (over 5:1) often signals you could grow faster by investing more in acquisition.

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