Free LTV:CAC Ratio Calculator
Check whether your unit economics work by comparing customer lifetime value to acquisition cost.
Unit Economics
Monthly
Results
Customer LTV
$1,584
LTV:CAC Ratio
3.2x
Healthy
Payback Period
6.3 months
Avg. Customer Lifespan
20.0 months
Understanding the LTV:CAC Ratio for SaaS
The LTV:CAC ratio is the gold standard for measuring SaaS unit economics. It compares how much revenue a customer generates over their lifetime against the cost to acquire them. A ratio of 3:1 or higher is considered healthy — meaning every dollar you spend on acquisition returns three in lifetime value. Below 1:1, you are losing money on every customer you acquire.
- Calculate customer lifetime value using ARPU, gross margin, and churn rate
- Determine your CAC payback period to understand cash flow implications
- Benchmark your ratio against the industry standard 3:1 target
- Identify whether to focus on reducing CAC or improving retention
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LTV:CAC Ratio Calculator FAQ
The industry benchmark is 3:1 — meaning each customer generates 3x more lifetime value than it costs to acquire them. Below 1:1 means you lose money on every customer.
LTV = (ARPU × Gross Margin) / Monthly Churn Rate. This gives you the total gross profit a customer generates before they churn.
CAC payback is how many months it takes to recoup the cost of acquiring a customer. It equals CAC divided by (ARPU × Gross Margin). Under 12 months is ideal for most SaaS businesses.
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