LTV to CAC Ratio Calculator (Spreadsheet Included)
Using the link below, you’re able to make a copy and plug your own numbers in. We’ve used this template a ton over the past few years and it’s proven itself useful for SaaS, E-Comm, and even retainer services. Check it out and Feel free to share it, make copies and reach out if you have any questions!
Email for questions: hello@variant.media
Sample SaaS product: An Assignment Management Tool we’re working on
LTV to CAC Ratio Calculator Template
https://docs.google.com/spreadsheets/d/1DIOZrcghSxrQAUEQ4Zua3iB-_Y7WOkaU6rigod0QDds/edit?usp=sharing
Description of the Sheet
The purpose of this document is to prove out the model for a profitable outcome
We do this by establishing a margin between two terms: total customer value over the total marketing cost per customer.
Total Customer Value ('Life Time Value' or 'LTV')
This is determined by the value per transaction times the number of recurring transactions in a given period. The first of these transactions is represented by the Avg. Value / Trans. (initial purchase value) Avg. Value / Recurring Trans. accounts for the purchase value of all following transactions by the same customer
As we move from month to month, we assume a dropoff in customers which decreases the value over time. From the above, we can figure out Total Est. Revenue per customer (or Customer Value / LTV)
Total Marketing Cost per Customer ('Customer Acquisition Costs' or 'CAC')
This is figured out based on the initial cost we pay per 1000 people. From there, the cost will increase at each stage of the funnel
An example of a staged out funnel would be as follows:
Click Thru Rate = percentage of people that click the ad.
Registration Rate = Percentage of the previous step to register.
Free Trial Rate = Percentage of previous step to start a free trial.
Initiated Checkout Rate = Percentage of registrations that start the checkout process.
Purchase Rate = Percentage of the previous step that succeeded in a purchase.
The product of the percentages times the original cost per 1000 people gives us a cost per customer. Once we have the two calculations above, we can then accomplish our final calculation:
LTV to CAC Ratio - This is the value over the cost which gives up a return per dollar spent.
Once you have this number you’re able to model out any amount of spend by simply multiplying it by this ratio. and find confidence in your marketing efforts. It
