CPC, CPA, ROAS, LTV, CAC — Complete Calculation Guide with Examples

Marketing metric calculations explained with formulas, examples, and benchmarks. CPC, CPA, ROAS, CTR, CVR, LTV, CAC, payback period, MER — all the formulas marketers should know by heart.

Marketing metrics aren't just numbers — they're decision-making tools. Knowing the formulas isn't enough; understanding when to use which metric, what's wrong about the obvious calculation, and what the number doesn't say is what separates operators from button-pushers.

Cost metrics

  • CPC (Cost Per Click): Total Spend / Total Clicks
  • CPA (Cost Per Acquisition): Total Spend / Total Conversions
  • CPM (Cost Per Mille): (Total Spend / Total Impressions) × 1,000
  • CPV (Cost Per View): Total Spend / Total Views (video)
  • CPCV (Cost Per Completed View): Total Spend / Completed Views
  • CPL (Cost Per Lead): Total Spend / Leads Generated
  • CPI (Cost Per Install): Total Spend / App Installs
  • CPS (Cost Per Sale): Total Spend / Total Sales (synonym for CPA in commerce)

Rate metrics

  • CTR (Click-Through Rate): (Clicks / Impressions) × 100
  • CVR (Conversion Rate): (Conversions / Clicks or Visitors) × 100
  • VCR (Video Completion Rate): Completed Views / Started Views
  • Engagement Rate: (Engagements / Reach or Impressions) × 100
  • Bounce Rate: (Single-Page Sessions / Total Sessions) × 100
  • Open Rate (Email): (Opens / Delivered) × 100
  • Click Rate (Email): (Clicks / Delivered) × 100
  • Click-to-Open Rate (CTOR): (Clicks / Opens) × 100

Return metrics

  • ROAS: Revenue Attributed to Ads / Ad Spend (expressed as multiplier or %)
  • ROI: (Gain - Cost) / Cost × 100%
  • MER (Marketing Efficiency Ratio): Total Revenue / Total Marketing Spend
  • Profit ROAS: Profit from Ads / Ad Spend
  • Contribution Margin ROAS: Contribution Margin / Ad Spend
  • POAS (Profit on Ad Spend): Synonym for Profit ROAS
  • tROAS Target: Goal ROAS for bidding strategies (e.g., 4.0 = 400% return)

LTV and CAC

  • Simple LTV: Average Order Value × Average Purchase Frequency × Customer Lifespan
  • Cohort LTV: Sum of revenue from cohort divided by cohort size, projected forward
  • Predictive LTV: Statistical models (BG/NBD, Gamma-Gamma) estimating future value
  • CAC (paid): Paid Acquisition Spend / Customers Acquired Through Paid
  • Blended CAC: All Marketing Spend / All Customers Acquired (organic and paid)
  • Fully-Loaded CAC: Total Customer Acquisition Cost including salaries, agencies, tools
  • LTV:CAC Ratio: Customer Lifetime Value / Customer Acquisition Cost (3:1 is healthy benchmark)
  • CAC Payback Period: CAC / (Monthly Contribution Margin per Customer), in months

SaaS-specific calculations

  • MRR (Monthly Recurring Revenue): Sum of monthly subscription value across active customers
  • ARR (Annual Recurring Revenue): MRR × 12, or sum of annual subscription value
  • Net New MRR: New MRR + Expansion MRR - Contraction MRR - Churned MRR
  • Net Revenue Retention (NRR): (Starting MRR + Expansion - Contraction - Churn) / Starting MRR × 100
  • Gross Revenue Retention (GRR): (Starting MRR - Contraction - Churn) / Starting MRR × 100 (no expansion)
  • Quick Ratio: (New + Expansion MRR) / (Churn + Contraction MRR)
  • Magic Number: (Current Quarter Revenue - Previous Quarter Revenue) × 4 / Previous Quarter S&M Spend
  • Rule of 40: Revenue Growth Rate (%) + Profit Margin (%) ≥ 40 indicates SaaS health
  • Burn Multiple: Net Cash Burn / Net New ARR

RGM Experts Say

The metric most marketers calculate wrong is LTV. The simple formula (AOV × Frequency × Lifespan) assumes constant behavior — which is rarely true. Use cohort-based actual LTV for historical analysis and predictive models for forward-looking. Decisions made on the simple formula often dramatically over-state customer value, leading to overspending on CAC.

Email-specific calculations

  • Email Deliverability Rate: Delivered / Sent × 100
  • Email Bounce Rate: Bounces / Sent × 100
  • Hard Bounce Rate: Permanent bounces / Sent × 100
  • Soft Bounce Rate: Temporary bounces / Sent × 100
  • Open Rate: Unique Opens / Delivered × 100
  • Click Rate (CTR): Unique Clicks / Delivered × 100
  • Click-to-Open Rate (CTOR): Unique Clicks / Unique Opens × 100
  • Unsubscribe Rate: Unsubscribes / Delivered × 100
  • Complaint Rate (Spam Rate): Complaints / Delivered × 100
  • List Growth Rate: (New Subscribers - Unsubscribes - Bounces) / Previous Total × 100

Reach and frequency

  • Reach: Unique users exposed to campaign
  • Frequency: Total Impressions / Reach (Unique Users)
  • GRP (Gross Rating Points): Reach × Frequency × 100
  • TRP (Target Rating Points): GRP weighted by target audience
  • Effective Reach: Reach at minimum frequency threshold (e.g., 3+ exposures)
  • Effective Frequency: Frequency needed for ad effect (typically 3-7 exposures)

Related guides

Sources

  1. [1]IAB standards; SaaS Capital benchmarks; Reichheld NPS framework