LTV/CAC Calculator

Analyze the ratio between Customer Lifetime Value and Acquisition Cost

Customer LTV

Customer Acquisition Cost

Monthly Revenue / Customer

$/mo

Gross Margin80%

LTV:CAC Analysis

3.2:1

Excellent

Gross LTV:CAC (target: 3:1+)

4:1

Revenue LTV:CAC

$960

Gross LTV

7.7 mo

Payback Period

$660

Net Value / Customer

Your unit economics are strong. A 3:1 ratio or higher is the gold standard for sustainable SaaS growth. Keep optimizing both retention and acquisition.

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LTV:CAC Ratio

The gold standard metric for SaaS unit economics. Investors look for 3:1 or better.

Gross Margin Adjusted

Calculates LTV:CAC using gross margin for a more accurate picture of profitability.

Payback Analysis

Know exactly how long it takes to recover your acquisition investment from each customer.

Actionable Insights

Get specific recommendations based on your ratio to improve unit economics.

About This Calculator

The LTV:CAC ratio is the cornerstone of SaaS unit economics. It compares how much revenue a customer generates over their lifetime (LTV) to how much it costs to acquire them (CAC). This ratio tells you whether your growth spending is efficient and sustainable. A ratio below 1:1 means you lose money on every customer; a ratio of 3:1 or higher is generally considered healthy. This calculator also factors in gross margin so you can see the profitability-adjusted ratio, not just the revenue-based one.

How to Use

Enter your Customer Lifetime Value (LTV) -- use our LTV calculator if you need to compute this first.

Enter your Customer Acquisition Cost (CAC) -- the total sales and marketing spend divided by new customers acquired in that period.

Optionally input your gross margin percentage to see the margin-adjusted LTV:CAC ratio and CAC payback period in months.

Frequently Asked Questions

What is a good LTV:CAC ratio?

A ratio of 3:1 is the widely cited benchmark for healthy SaaS businesses -- you earn three dollars for every dollar spent acquiring a customer. Below 1:1 is unsustainable. Between 1:1 and 3:1 suggests room for improvement. Above 5:1 might mean you are under-investing in growth and leaving market share on the table.

Why does gross margin matter for LTV:CAC?

Revenue-based LTV overstates the true value of a customer because it ignores the cost of delivering the service (hosting, support, infrastructure). Multiplying LTV by your gross margin gives you the profit-adjusted LTV, which is a more accurate measure of how much value each customer actually creates for your business.

How do I reduce my CAC?

Common strategies include improving conversion rates on your website, investing in organic channels like SEO and content marketing, launching a referral or affiliate program, shortening the sales cycle with better qualification, and reducing reliance on paid advertising. Even a 10% improvement in conversion rates can meaningfully lower CAC without cutting marketing spend.