Most founders know their revenue and roughly what they spend to win a client. Far fewer can say how many months of that revenue it takes to get the acquisition cost back — which is the number that decides whether you can grow off your own cash flow or need someone else's.
Shown in full, because a calculator you can't check is just an opinion with a number on it.
Gross margin per month × expected lifetime, where lifetime is 1 ÷ monthly churn. At 5% monthly churn the average customer stays 20 months.
We use gross margin, not revenue. LTV on revenue flatters every service business, because delivering the service costs real money. If you are not sure of your margin, a rough figure beats leaving it at 100%.
CAC ÷ monthly gross margin, plus your sales cycle — because the money went out before any of it came back, and that gap is real to your bank account even though it is invisible in an LTV:CAC ratio.
The curve is survival-weighted: it does not assume every customer is still paying in month 20.
The under-12-months payback and 3:1 LTV:CAC thresholds are widely used SaaS conventions, popularised by David Skok and Bessemer. They are rules of thumb, not laws — a business with negative churn or a very long contract can justify breaking both. Treat them as a starting question, not a verdict.
No discounting to present value, no expansion revenue, no cohort segmentation. Those matter at scale and would need data you cannot type into five fields. This answers one question well rather than four badly — and the ratio it gives you is directionally the same one a term sheet will ask about.
If the ratio is weaker than you expected, the usual levers are what you pay to win a customer and how long they stay. Check how much of your ad spend is working with the Google Ads Spend Efficiency Calculator, and what reviews might do for local conversion with the Review Deficit Calculator. For help acting on the numbers, see our services and pricing. Outreach quality also affects what it costs to win a customer, so check yours with the Cold Email Checker.