SaaS Marketing Budget Calculator

What is Lifetime Value (LTV)?

Lifetime Value (LTV) is the total revenue a business can expect from a single customer over the course of their relationship.

Example: If a customer spends $50 per month on your subscription service and stays for 24 months, their LTV is $50 × 24 = $1,200.

What is CAC (Customer Acquisition Cost)?

Customer Acquisition Cost (CAC) is the cost of acquiring a new customer, including expenses like marketing, sales, and advertising.

Example: If you spend $10,000 on marketing and acquire 100 customers, your CAC is $10,000 ÷ 100 = $100.

What is the LTV/CAC Ratio?

The LTV/CAC ratio measures the efficiency of your customer acquisition efforts by comparing the revenue generated by a customer to the cost of acquiring them.

• Ideal Ratio: A healthy LTV/CAC ratio is usually 3:1.
• Example: If your LTV is $1,200 and CAC is $400, your ratio is 1,200 ÷ 400 = 3:1.

What is PPC (Pay-Per-Click)?

Pay-Per-Click (PPC) is a digital advertising model where advertisers pay a fee each time someone clicks on their ad.

Example: A Google ad campaign costs $1 per click. If your ad gets 100 clicks, you pay $100.

What is Conversion?

A conversion occurs when a visitor completes a desired action, such as making a purchase, signing up for a newsletter, or downloading an app.

Example: If 1,000 people visit your website and 50 make a purchase, you’ve had 50 conversions.

How to Calculate Conversion Rate and CAC?

Example: If you have 500 visitors and 25 conversions, your conversion rate is: (25÷500)×100=5%

What is Churn?

Churn refers to the percentage of customers who stop doing business with your company within a given time frame.

Example: If you had 1,000 customers and lost 50, your churn rate is: (50÷1,000)×100=5%