CAC Payback, LTV & True ROAS Calculator
Find your real customer acquisition cost, lifetime value, and payback period — then see how your ROAS actually holds up once you strip out margin and incrementality. No paid-media or finance background required.
= 60.0% gross margin
= 70.0% gross margin
= 25.0 months average retention
From that ad spend, in the same period.
The % of these conversions that wouldn’t have happened without the ads — the rest is organic/brand demand the ads got credited for anyway. Lower for retargeting/branded search, higher for cold prospecting.
Your ROAS, four ways
Watch what happens to your return once you strip out cost of goods and organic demand.
What most ad dashboards report.
After removing cost of goods / delivery.
After removing sales that would’ve happened anyway.
After removing both — the real profit-generating return.
How we calculate this (repeat-purchase / e-commerce)
CAC = Ad Spend ÷ New Customers Acquired. LTV = Average Order Value × Gross Margin × Purchase Frequency × Customer Lifespan. Your LTV:CAC ratio should generally be at least 3:1 to be healthy, with 5:1+ considered excellent. CAC Payback is how many months it takes the gross margin from a customer to recoup what you spent acquiring them.
Revenue ROAS is revenue ÷ ad spend — what most ad platforms report. We then apply your gross margin (removing cost of goods) and your incrementality estimate (removing sales that would’ve happened without ads anyway) to arrive at Incremental Margin ROAS: the number that reflects real, ad-driven profit.
How we calculate this (subscription / recurring)
CAC = Ad Spend ÷ New Customers Acquired. LTV = Monthly Revenue per Customer × Gross Margin × Average Retention (months), where retention = 1 ÷ monthly churn rate if entered that way. Your LTV:CAC ratio should generally be at least 3:1 to be healthy, with 5:1+ considered excellent.
CAC Payback is how many months of margin from a customer it takes to recoup their acquisition cost. Note that first-period Revenue ROAS often looks low for subscription businesses — that’s expected, since the real value is captured over many months of retention, not the first transaction. We still show all four ROAS lenses (Revenue, Margin, Incremental, Incremental Margin) using first-period revenue, for the same reason ad platforms do — but for subscription businesses, LTV:CAC and payback period are the more reliable health signals.
See what this looks like at different spend levels
Drag the slider (or pick a preset) to see projected results at that monthly ad spend, comparing what gets reported against what’s actually real.
This tool provides simplified estimates for planning purposes only, based on the numbers you enter. Incrementality is a self-reported estimate — for a rigorous, causal read on your true incremental impact, run a geo or audience holdout test. Across the spend-level projections, we hold your CAC, margin, and incrementality constant to isolate the effect of scale; in reality these all shift as you increase spend. Actual advertising performance depends on many additional factors (platform, targeting, creative, market conditions, seasonality) and isn’t guaranteed. Use these figures as a starting point for decisions, not a promise of results.