LTV by Channel Calculator

Compare customer lifetime value and acquisition cost across marketing channels to identify which channels deliver genuinely profitable customers.

📊 Marketing📐 Channel LTV:CAC = (channel ARPA × margin / channel churn) / channel CAC💼 Business
Channel A — monthly ARPA
Channel A — monthly churn (%)
Channel A — CAC
Channel B — monthly ARPA
Channel B — monthly churn (%)
Channel B — CAC
Gross margin (%)
Please enter valid values.

Formula & Reference

VariableSymbolFormulaUnits
LTV by Channel Calculator—Channel LTV:CAC = (channel ARPA × margin / channel churn) / channel CACratio

Step-by-Step Examples

Example 1
Cheap vs Valuable

Channel A: ARPA 95, churn 3.5%, CAC 620. Channel B: ARPA 140, churn 2.0%, CAC 1,450. Margin 80%.

  • A: LTV = 95 × 0.80 / 0.035 = 2,171, ratio 3.50:1, payback 8.2 months
  • B: LTV = 140 × 0.80 / 0.020 = 5,600, ratio 3.86:1, payback 12.9 months
  • B has higher CAC but better lifetime economics
  • Blended analysis would have hidden this
✓ A 3.50:1, B 3.86:1 — B is better despite higher CAC
Example 2
Cheap but Poor

Channel A: ARPA 40, churn 9%, CAC 300. Channel B: ARPA 120, churn 2.5%, CAC 1,100.

  • A: LTV = 40 × 0.80 / 0.09 = 356, ratio 1.19:1
  • B: LTV = 3,840, ratio 3.49:1
  • A looks cheap but barely returns its acquisition cost
✓ A 1.19:1 — cheap acquisition, poor customers
Example 3
Payback Trade-Off

Channel with 3.86:1 ratio but 12.9 month payback versus 3.50:1 at 8.2 months.

  • The better ratio takes 4.7 months longer to recover cash
  • For a cash-constrained business, faster payback may matter more than total return
✓ Ratio and payback can point different ways

Real-World Applications

Common Mistakes to Avoid

⚠️
Optimising for lowest CAC

Cheap channels often deliver customers who churn quickly. Low CAC with high churn can produce worse economics than expensive high-quality acquisition.

⚠️
Using blended churn across channels

Churn varies substantially by acquisition source. Applying one blended rate to every channel destroys the entire point of the analysis.

⚠️
Ignoring payback period alongside ratio

A strong LTV:CAC with a long payback strains cash. Both dimensions matter, particularly for businesses funding growth from operations.

Frequently Asked Questions

Why calculate LTV by channel? ▾
Because channels produce customers with different retention and spending behaviour. Blended figures hide channels that are unprofitable or exceptional.
What causes churn to vary by channel? ▾
Intent and fit. Customers arriving from high-intent search typically retain better than those from broad interruptive advertising.
Should I always fund the highest LTV:CAC channel? ▾
Usually, but channels have volume ceilings. The best channel often cannot absorb unlimited budget, so allocation spans several.
How does payback period factor in? ▾
It determines cash strain. A channel with a good ratio but a long payback consumes cash for longer before recovering it.
How much data do I need per channel? ▾
Enough cohort history to observe actual retention. Estimating channel churn from a few months of data on small cohorts is unreliable.

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