App Marketing Metrics Explained: CPI, CAC, LTV and ROAS
By The Otto Team · Published 2026-10-12 · Updated 2026-10-15 · 1 min read
Key takeaways
- CPI = ad spend ÷ installs; CAC = acquisition spend ÷ paying customers.
- LTV = monthly revenue per user × average lifetime; aim for LTV:CAC of about 3:1.
- Break-even ROAS = 1 ÷ gross margin.
- Better creative lowers CPI and attracts more qualified users.
Four acronyms dominate app marketing conversations. Here is each one, the formula and how to use them together.
The metrics
| Metric | Formula | Question it answers |
|---|---|---|
| CPI (cost per install) | Ad spend / installs | How much does an install cost? |
| CAC (customer acquisition cost) | Acquisition spend / new paying customers | How much does a paying user cost? |
| LTV (lifetime value) | Average revenue per user x average lifetime | What is a customer worth? |
| ROAS (return on ad spend) | Revenue from ads / ad spend | What did each ad dollar return? |
| Payback period | CAC / monthly gross profit per user (revenue if margin is ~100%) | How fast do we earn it back? |
Worked example
Suppose you spend $2,000 and get 800 installs. CPI = $2.50. Five percent of installs subscribe, so 40 paying users. CAC = $50. Each subscriber pays $12 a month for an average of 9 months, so LTV = $108. LTV to CAC is 2.2 to 1, and payback is about 4.2 months. Improving install-to-subscriber conversion from 5% to 7% would lower CAC to about $35.71.
Which lever to pull
- High CPI: improve creative hooks and targeting.
- Low install-to-purchase: fix onboarding and paywall.
- Low LTV: improve retention and pricing.
Why creative drives all of it
On TikTok and Reels, creative is the targeting. A stronger hook lowers CPI and attracts more qualified users. That is why teams test many hooks quickly; see TikTok hook formulas.
Calculate yours
Plug your own numbers into the free app ROAS, LTV and CAC calculator.
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Frequently asked questions
What is a good LTV to CAC ratio?
A common rule of thumb is 3 to 1 or better, meaning a customer returns at least three times what it cost to acquire them. The right target depends on your margins and cash position.
What is the difference between CPI and CAC?
CPI is the cost of an install. CAC is the cost of acquiring a paying customer, which includes the conversion from install to purchase and often non-media costs.
Related reading
- Social Media Marketing for SaaS and Web Apps on a Small Budget — How SaaS and web app founders can use short-form video on TikTok, Instagram and LinkedIn to get sign-ups: messaging, formats, workflow and metrics.
- How to Promote an App on TikTok (2026 Guide) — A step-by-step plan to promote a mobile or web app on TikTok: content types, hooks, posting cadence, organic vs paid and how to measure what works.
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