How this calculator works
This model simulates a full-funnel paid search acquisition system using realistic assumptions across three layers:
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Traffic generation
Budget, CPC, and CTR determine impressions and clicks. -
Pipeline performance
Conversion rates define how clicks turn into leads, SQLs, and closed deals. -
Unit economics
Revenue and margin inputs translate deals into CAC, LTV, and payback period.
All outputs represent steady-state performance, assuming the campaign has exited the learning phase (typically after 3–6 months).
Funnel calculations
Clicks
[ Clicks = \frac{Budget}{CPC} ]
Impressions
[ Impressions = \frac{Clicks}{CTR / 100} ]
Leads
[ Leads = Clicks \times \frac{Click\rightarrow Lead}{100} ]
Sales Qualified Leads (SQLs)
[ SQLs = Leads \times \frac{Lead\rightarrow SQL}{100} ]
Deals
[ Deals = SQLs \times \frac{SQL\rightarrow Close}{100} ]
Cost metrics
Customer Acquisition Cost (CAC)
[ CAC = \frac{Budget}{Deals} ]
Lead Cost
[ Lead\ Cost = \frac{Budget}{Leads} ]
SQL Cost
[ SQL\ Cost = \frac{Budget}{SQLs} ]
Revenue & profitability metrics
Lifetime Value (LTV)
[ LTV = MRR \times Customer\ Lifetime ]
LTV to CAC Ratio
[ LTV:CAC = \frac{LTV}{CAC} ]
Payback Period
[ Payback = \frac{CAC}{MRR \times (Gross\ Margin / 100)} ]
This estimates how many months it takes to recover acquisition costs from gross profit.
Overall Conversion Rate
[ Overall\ Conversion\ Rate = \frac{Deals}{Clicks} \times 100 ]
This represents the post-click efficiency of the entire pipeline, from first click to closed deal.
How to interpret the results
LTV : CAC ratio
- Below 3:1 — Risky or unscalable
- 3:1 – 5:1 — Healthy for most growth-stage companies
- 5:1+ — Strong unit economics
Payback period
- Under 6 months — Excellent
- 6–12 months — Acceptable for most B2B and SaaS businesses
- Over 12 months — Capital intensive and higher risk
Why this calculator matters
- Prevents overspending before validating funnel economics
- Forces realistic assumptions across the entire acquisition pipeline
- Aligns marketing performance with financial outcomes
- Helps founders and growth teams decide whether paid search is worth scaling
FAQ
Are the industry benchmarks accurate?
Benchmarks are directional estimates based on common industry ranges. Actual performance will vary depending on market, offer, targeting, and execution.
Does this calculator include churn or expansion revenue?
No. LTV is calculated using base MRR and customer lifetime only. Expansion revenue and churn reduction should be modeled separately.
Is this calculator suitable for B2C businesses?
It can be used for B2C, but it is best suited for B2B, SaaS, and high-consideration funnels where SQLs and deal stages exist.
