LTV:CAC Calculator
Evaluate your SaaS unit economics in seconds. Input your revenue, costs, and churn below to calculate LTV, CAC, and your health score. All calculations run locally in your browser — nothing is sent to any server.
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SaaS Benchmarks by Stage
| Stage | LTV:CAC Ratio | CAC Payback (mo) | Monthly Churn | Status |
|---|---|---|---|---|
| Seed | 1-2:1 | 12-18 | 5-8% | Finding product-market fit |
| Series A | 2-3:1 | 9-12 | 3-5% | Scaling with healthy unit economics |
| Growth | 3-5:1 | 6-9 | 2-3% | Strong retention, optimized CAC |
| Scale (Public) | 5+:1 | <6 | <2% | Excellent retention, efficient growth |
Understanding the Metrics
Customer Lifetime Value (LTV)
Formula: (ARPA × Gross Margin) / Monthly Churn Rate
This represents the total gross profit you'll generate from an average customer before they churn. It's the most important metric for deciding how much you can spend to acquire a customer.
Example: If ARPA is $500, gross margin is 75%, and monthly churn is 5%, then LTV = ($500 × 0.75) / 0.05 = $7,500. You'll earn $7,500 in gross profit from each customer over their lifetime.
Customer Acquisition Cost (CAC)
Formula: Total Marketing + Sales Spend / New Customers
This is how much you spend (on marketing, sales team, tools) to acquire each new customer. It includes all costs directly attributable to bringing customers in — ads, sales reps, content, events, etc.
Example: If you spend $5,000 on marketing and acquire 15 customers, your CAC is $5,000 / 15 = $333 per customer.
LTV:CAC Ratio
Formula: LTV / CAC
This ratio tells you how much lifetime value you generate for every dollar spent acquiring a customer. It's the single most important unit economics metric for SaaS investors.
- <2:1 — You're spending too much to acquire customers or losing them too fast.
- 3:1 — Healthy baseline. Most growth-stage companies target this.
- 5:1+ — Excellent unit economics. You can afford to increase CAC spending.
CAC Payback Period
Formula: CAC / (ARPA × Gross Margin)
How many months of gross profit it takes to pay back what you spent acquiring a customer. Shorter is better — it means you recoup acquisition costs faster and can reinvest sooner.
- <6 months — Excellent. Fast payback means capital efficiency.
- 9-12 months — Healthy for most SaaS. Gives you time to expand and upsell.
- >12 months — Long payback. May need better retention or lower CAC.
Monthly Churn Rate
The percentage of customers you lose each month. Churn directly impacts LTV — reduce churn, and LTV doubles. This is often overlooked but is one of the highest-leverage improvements.
- 2-3% — Excellent for B2B SaaS.
- 5-8% — Common for early-stage and mid-market SaaS.
- >10% — High churn. Focus on retention before scaling acquisition.
How to Improve Your Ratio
Increase LTV
- Reduce churn through better onboarding and support
- Raise prices (even 5-10% with little churn increase)
- Improve gross margin by optimizing infrastructure costs
- Cross-sell and upsell to existing customers
Decrease CAC
- Focus on high-intent channels (content, word-of-mouth, partnerships)
- Improve conversion rates through funnel optimization
- Reduce time-to-close in sales process
- Build a referral program to lower acquisition cost
Optimize Both
- Target higher-value customer segments (enterprise vs. SMB)
- Implement product-led growth (free trials, freemium)
- Develop strategic partnerships for distribution
- Track CAC and LTV per channel to focus on winners
Frequently Asked Questions
What is a good LTV:CAC ratio for SaaS?
The industry minimum is 3:1, though most successful SaaS companies target 5:1 or higher. At 3:1, for every dollar you spend acquiring a customer, you make $3 in lifetime profit — which is healthy but leaves little room for scaling. At 5:1+, you have the unit economics to invest more aggressively in growth.
How do I calculate my churn rate?
Monthly Churn = (Customers Lost This Month / Customers at Start of Month) × 100
For example: if you started with 100 customers and lost 5, your churn is 5%. This calculator uses this as an input directly, so you should track it from your billing system.
Should I include all expenses in CAC?
CAC should include all costs that directly drive customer acquisition: marketing spend, sales team salaries, sales commissions, tools used for selling/marketing, events, and partnerships. Don't include general overhead like admin or product development.
How does gross margin affect LTV?
Gross margin is critical because LTV is calculated from gross profit, not revenue. If you make $500/month from a customer but it costs $200 to serve them (hosting, support, payment processing), your gross profit is only $300. Always use realistic gross margins.
What's the difference between CAC and CAC payback?
CAC is how much you spend upfront to acquire a customer ($333 in the example). CAC payback is how long it takes to earn that back in gross profit (0.8 months in the example). Shorter payback means you can reinvest faster.
How often should I recalculate my unit economics?
Track these metrics monthly. Keep a spreadsheet and review quarterly to spot trends. If your CAC is rising or churn is increasing, act fast — both trends indicate problems that compound over time.
Related Reading
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