Free contractor tool
Enter your numbers below. See your margin-based LTV, your LTV:CAC ratio, and whether your first job already covers what you spent to get that customer. No email required.
Your LTV:CAC results
How this works
Most contractors look at cost per lead. That is a start, but it does not tell the whole story. Two contractors can have the same cost per lead and completely different business outcomes, depending on how much each customer is worth over time.
The LTV:CAC ratio puts those two numbers together. Lifetime Value (LTV) is the total margin you earn from one customer across all the jobs they give you, including repeat work and referrals. Customer Acquisition Cost (CAC) is what you spent, on average, to get them.
A 3:1 ratio is generally seen as healthy for service businesses. You earn $3 in profit for every $1 you spend on marketing. Below 1:1, you are losing money on every customer. Above 5:1, you may have room to invest more aggressively and grow faster without hurting profitability.
The CAC payback check in this calculator answers a simpler question: does the very first job pay back what you spent to get that customer? If yes, you have positive cash flow from day one. If not, you are counting on repeat business or referrals to break even, which is riskier.
Real result, not a projection
per month running the full system: website, Google Ads, and content, all pulling in the same direction.
Questions
A ratio of 3:1 is generally considered healthy for service businesses. It means you earn $3 in lifetime profit for every $1 you spend to acquire a customer. Anything under 1:1 means you are losing money on each customer. Ratios above 5:1 can mean you are underinvesting in growth and leaving jobs on the table.
Multiply your average job value by your gross margin percentage, then multiply that by the total number of jobs you expect from one customer over their lifetime (including repeat work and referrals). That gives you a margin-based LTV, which is what you should compare to your acquisition cost.
CAC is the total marketing and sales spend it took to win one new customer. Add up your ad spend, agency fees, software costs, and any time spent on sales, then divide by the number of new customers you brought in during that period. Do not count referral customers who came in with no ad spend against your paid CAC.
CAC payback tells you whether the gross profit from the very first job covers what you spent to get that customer. If your first-job margin exceeds your CAC, you recoup your marketing spend immediately. If not, you are relying on repeat business or referrals to get back to profitability, which means cash flow takes longer to recover.
Revenue is not profit. If you use raw revenue as your LTV, you will think you can afford a much higher CAC than you actually can. Using margin-based LTV (revenue minus materials, labor, and direct costs) gives you a realistic picture of what each customer is actually worth to your bottom line.
Related tools
Ready to run the real numbers?
The calculator gives you a benchmark. A strategy video gives you a real plan: which campaigns to run, what budget makes sense, and what results we would actually target for your market. No cost, no obligation.
