Marketing ROI Calculator: ROAS, CAC, LTV & payback
Are your ads actually profitable? Enter your spend, revenue and margin to get ROAS, break-even ROAS and CAC, then add customer value to see LTV, the LTV:CAC ratio and how fast a customer pays back.
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How to read your results
ROAS tells you how much revenue each unit of ad spend brought in, but revenue is not profit. Compare it with your break-even ROAS (1 ÷ gross margin): above it, the ads earn more gross profit than they cost.
CAC is what it costs to win one customer. LTV is the gross profit you expect from that customer over their lifetime. LTV:CAC compares the two, and payback tells you how many months it takes to earn the CAC back, which matters for cash flow.
The colour signals (green, amber, red) use widely quoted rules of thumb: ROAS relative to break-even, LTV:CAC of 3:1 or better, payback within 12 months. They are starting points, not guarantees. Healthy targets depend on your margins, sector, cash position and growth stage.
Methodology
Assumptions and limits: LTV is a simple gross-margin estimate. It assumes constant order value, frequency and churn, and applies no discounting. ROAS depends on your attribution model and counts only the spend and costs you include. CAC here divides all the spend you enter by all the new customers you enter, so make sure both cover the same channels and period. Returns, refunds, overheads and taxes are not modelled unless you include them in your inputs.
Frequently asked questions
What is ROAS and how is it calculated?
Return on ad spend (ROAS) is the revenue attributed to your ads divided by what you spent on them. A ROAS of 4 means every 1 spent brought back 4 in revenue. It ignores your costs of goods, so it does not say whether the ads were profitable.
What is break-even ROAS?
Break-even ROAS is 1 divided by your gross margin. With a 40% margin it is 2.5: below that, each sale earns less gross profit than the ads that produced it cost. Your ROAS target must sit above it.
What is a good LTV:CAC ratio?
A widely quoted rule of thumb is 3:1 or better. Below 1:1 you lose money on every customer; far above 5:1 can mean you are under-investing in growth. The right target depends on your margins, cash position and stage.
What is CAC payback?
CAC payback is the number of months of gross profit from a customer needed to earn back what it cost to acquire them. Twelve months or less is a common target, but it varies by business model.
What is the difference between ROAS and ROI?
ROAS compares revenue with ad spend. ROI compares profit with total cost. A campaign can have a healthy-looking ROAS and a negative ROI once margins and other costs are counted.