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Social Media LTV to CAC Ratio Calculator

Estimate your social media customer lifetime value to customer acquisition cost ratio using revenue, margin, retention and acquisition spend.

Your Details

Overview

The Social Media LTV to CAC Ratio Calculator helps you estimate whether customers acquired through paid social campaigns are worth the cost of acquiring them. Enter your average monthly revenue per customer, customer lifespan, gross margin, social media spend and new customers acquired to see your estimated LTV, CAC and ratio.

How it works

The calculator first estimates customer lifetime value by multiplying average monthly revenue per customer by average customer lifespan and gross margin. It then calculates customer acquisition cost by dividing social media spend by the number of new customers acquired. Finally, it divides LTV by CAC to show how much lifetime gross profit you generate for each dollar spent on acquisition. A higher ratio generally suggests more efficient acquisition, while the payback period shows how quickly acquisition cost may be recovered.

How to use this calculator

  1. 1Enter your average monthly revenue per customer.
  2. 2Add the average customer lifespan in months.
  3. 3Enter your gross margin percentage.
  4. 4Input your total social media ad spend for the same period.
  5. 5Enter the number of new customers acquired from social media.
  6. 6Review the estimated LTV, CAC, ratio and payback period.

Example Calculation

Average revenue per customer

$500

Gross margin

70%

Average customer lifespan

12

Average monthly revenue per customer

$40

Social media ad spend

$2,000

New customers acquired

50

Estimated LTV

$336

With average monthly revenue of $40, a 12-month lifespan, a 70% gross margin, $2000 in social ad spend and 50 new customers, estimated LTV is about $336, CAC is $40, and the LTV to CAC ratio is about 8.40:1.

Frequently asked questions

What does the social media LTV to CAC ratio show?

It shows how much estimated lifetime gross profit you earn from a customer compared with what you spend to acquire that customer through social media.

What is a good LTV to CAC ratio?

Many businesses look for a ratio above 3:1, but the right target depends on your margins, cash flow, growth goals and business model.

Should LTV be based on revenue or gross profit?

Gross profit is usually more useful because it reflects the value left after direct costs, which makes the comparison with acquisition cost more meaningful.

Why is gross margin included?

Gross margin adjusts revenue into estimated gross profit so the LTV figure is not overstated.

What period should I use for social media spend and new customers?

Use the same period for both, such as one month or one quarter, so CAC is calculated consistently.

What does payback period mean?

Payback period estimates how many months of gross profit from an average customer are needed to recover the acquisition cost.

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Assumptions and warnings

Assumptions

  • Results are estimates based on the averages you enter for revenue, margin, lifespan and acquisition performance.
  • Social media spend is assumed to relate only to the new customers counted in the calculation.
  • LTV is shown on a gross profit basis when gross margin is included.
  • The calculator assumes customer behavior and costs remain broadly consistent over time.

Warnings

  • This calculator provides an estimate only and is not financial advice.
  • Use consistent time periods for revenue, customer lifespan, spend and customer acquisition data.