LTV by Channel Calculator
Compare customer lifetime value and acquisition cost across marketing channels to identify which channels deliver genuinely profitable customers.
Formula & Reference
| Variable | Symbol | Formula | Units |
|---|---|---|---|
| LTV by Channel Calculator | — | Channel LTV:CAC = (channel ARPA × margin / channel churn) / channel CAC | ratio |
Step-by-Step Examples
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
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
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
Real-World Applications
Common Mistakes to Avoid
Cheap channels often deliver customers who churn quickly. Low CAC with high churn can produce worse economics than expensive high-quality acquisition.
Churn varies substantially by acquisition source. Applying one blended rate to every channel destroys the entire point of the analysis.
A strong LTV:CAC with a long payback strains cash. Both dimensions matter, particularly for businesses funding growth from operations.