Subscription LTV Calculator
Model your subscription business with commission-based customer acquisition.
Why Commission Can Exceed 100%
For one-time purchase businesses, commission must stay below your margin to be profitable on day one. But subscription businesses think differently: you are paying for a customer, not a sale. If your LTV is $360 and you pay $45 to acquire that customer (150% commission on a $30 first order), your LTV:CAC ratio is 8x. That is excellent unit economics.
Quick Scenarios
Click a scenario to see how different subscription models work
Your Subscription Model
* This calculator provides directional estimates. Actual LTV depends on churn, upsells, and customer behavior. Actual acquisition volume depends on market demand and competition.
Unit Economics
Understanding LTV:CAC
The LTV:CAC ratio is the gold standard metric for subscription businesses. It tells you how much value you get for each dollar spent acquiring customers.
- 3x or higher: Healthy, sustainable growth
- 2-3x: Acceptable, but watch costs closely
- Below 2x: Unsustainable without improving LTV or reducing CAC
Payback Period
How many months until you recover your customer acquisition cost. Faster payback means better cash flow.
- Under 6 months: Excellent cash efficiency
- 6-12 months: Standard for most subscriptions
- 12+ months: Requires strong capital reserves
Why This Model Works
Traditional PPC charges per click regardless of outcome. Our model:
- You only pay when we generate a sale
- For subscriptions, recurring payments are commission-free
- Commission = predictable CAC you can model against LTV
- We fund all ad spend, so no upfront capital required
- Higher commission = more aggressive bidding = more volume
Subscription-Specific Questions
How can commission exceed 100%?
Because you are not buying a single transaction. You are buying a customer relationship. If a customer pays $30/month for 12 months ($360 LTV), paying $45 to acquire them (150% of first order) is highly profitable. The commission is your CAC, not your cost of goods.
What if customers churn faster than expected?
Your LTV drops and the economics change. We recommend being conservative with your lifetime estimates. Use actual cohort data if you have it. Start with a lower commission rate and increase it as you validate your LTV assumptions.
Do you only charge on the first order?
We charge commission on any order that comes through our ads. For most subscribers, this is only the initial purchase. All subsequent recurring payments are yours commission-free. However, if a customer clicks one of our ads and places another order, we would charge commission on that order too.
How do I calculate my actual LTV?
LTV = (Average Monthly Value) × (Average Customer Lifetime in Months). If you know your monthly churn rate, lifetime = 1 / churn rate. For example, 5% monthly churn = 20 month average lifetime.
What commission rate should I start with?
Start by calculating your target CAC. If your LTV is $300 and you want a 5x LTV:CAC ratio, your target CAC is $60. If first order is $30, that is a 200% commission rate. Contact us to discuss your specific model.
Can I adjust commission rate over time?
Yes. Many subscription businesses start conservative, validate their LTV assumptions with real data, then increase commission to acquire more customers once they are confident in the unit economics.
