CLV vs CPA Calculator

Determine if your business is viable by comparing Customer Lifetime Value to Cost Per Acquisition.

1. Unit Economics

2. Customer Lifetime Metrics

Churn Rate (Monthly)
8%
Avg Customer Lifetime
12.5 months
Lifetime Revenue
$625
Monthly Profit/Customer
$5

💡 Avg Lifetime = 1 / (1 - Retention Rate). With 92% retention, customers stay ~12.5 months.

3. CLV vs CPA Analysis

Customer Lifetime Value (CLV)

$62.5

Cost Per Acquisition

$40

CLV:CPA Ratio

1.6:1

Profit Per Customer

$22.5

✅

Business is Viable!

CLV ($62.5) > CPA ($40). You profit $22.5 per customer.

CLV:CPA Ratio Interpretation:

  • • 3:1+ = Excellent (healthy, scalable business)
  • • 2:1 - 3:1 = Good (room for growth)
  • • 1:1 - 2:1 = Marginal (optimize urgently)
  • • < 1:1 = Unsustainable (losing money)

4. Break-even & CPA Guidance

Break-even Point
8 months
Max Affordable CPA
$62.5
Recommended CPA (3:1)
$20.83

💡 Break-even = CPA ÷ Monthly Profit. Max CPA = CLV. For a healthy 3:1 ratio, keep CPA below $20.83.

5. Revenue Goal Planning

Customers Needed
1,667
Total Acquisition Cost
$66,680
Projected Revenue
$1,000,200
Projected Annual Profit
$37,507.5

💡 Customers Needed = Desired Revenue ÷ (ARPC × 12). Acquisition Budget = Customers × CPA.

6. Your Numbers Explained

Step 1: Each customer pays $50/month.

Step 2: With 92% monthly retention, your average customer stays 12.5 months.

Step 3: Lifetime revenue per customer = $50 × 12.5 = $625.

Step 4: At 10% margin, CLV = $625 × 10% = $62.5.

Step 5: It costs $40 to acquire a customer.

Conclusion: Since CLV ($62.5) > CPA ($40), you profit $22.5 per customer. ✅

📐 Key Formulas

Avg Customer Lifetime = 1 / (1 - Retention Rate)

CLV = ARPC × Gross Margin × Avg Lifetime

Profit/Customer = CLV - CPA

Break-even = CPA / (ARPC × Margin)

Customers Needed = Desired Revenue / (ARPC × 12)

Viability Rule = CLV must be > CPA