LTV:CAC Ratio Calculator
Compare customer lifetime value to acquisition cost to assess whether your growth is profitable and sustainable.
Gross profit a customer generates over their lifetime. Use the LTV Calculator if you need to compute this first.
Average spend to win one new customer: ads, sales salaries, tools, and agency fees.
LTV:CAC Ratio
7.2:1
Health Assessment
Excellent
Target 3:1 or higher for sustainable SaaS growth
Net Value Per Customer
$3,100.00
LTV:CAC Ratio
7.2:1
<3 weak · 3–4 healthy · 4–6 strong · 6+ review for underinvestment
Review for underinvestment
LTV:CAC above 6:1 may mean you are leaving growth on the table. Test incremental spend on proven channels.
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Under 6 months, reinvest recovered cash into growth channels with proven ROAS.
Open budget planner calculator →Strong ROAS
Profitable ad efficiency. Test incremental budget on top-performing campaigns.
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How it works
The LTV:CAC ratio is one of the most important SaaS metrics. It shows how much lifetime value you earn for every dollar spent acquiring a customer. A ratio of 3:1 or higher is widely considered healthy, though optimal targets vary by stage and market.
Frequently Asked Questions
What is LTV:CAC?
LTV:CAC is the ratio of Customer Lifetime Value to Customer Acquisition Cost. It answers: for every dollar spent acquiring a customer, how many dollars of lifetime gross profit do you earn back? It is the most widely cited unit economics benchmark for SaaS, subscription, and B2B businesses evaluating growth profitability.
How do you calculate the LTV:CAC ratio?
Divide LTV by CAC: LTV:CAC = LTV ÷ CAC. Use gross-margin LTV (not top-line revenue) and fully loaded CAC (ads, sales comp, tools, agencies). Example: $3,600 LTV ÷ $600 CAC = 6:1. Both metrics must reflect the same customer segment and time period, mixing enterprise LTV with blended CAC will skew results.
What is a good LTV:CAC ratio for SaaS?
Most growth-stage SaaS companies target 3:1 or higher. Below 1:1 means you lose money on each customer. Between 2:1 and 3:1 can work for early-stage companies with strong retention trends. Above 5:1 is excellent but may signal under-investment in growth. Investors typically expect seed-stage companies trending toward 3:1 and Series B+ sustaining it at scale.
What is the difference between LTV:CAC and CAC payback?
LTV:CAC measures lifetime profitability, whether a customer is worth more than they cost over their full relationship. CAC payback measures speed, how many months until gross margin contribution recovers acquisition cost. You can have strong LTV:CAC (5:1) but weak payback (18 months), meaning long-term profit but short-term cash strain. Track both for complete unit economics.
When is a low LTV:CAC ratio acceptable?
A ratio below 3:1 can be acceptable during pre-product-market fit (proving retention first), land-and-expand models (low initial deal, expansion later), strategic market entry, or products with strong network effects. In each case there must be a credible path to 3:1+ at scale, not an indefinite subsidy on every customer.
How do I improve my LTV:CAC ratio?
Increase LTV by reducing churn, raising ARPU through pricing and packaging, and driving expansion revenue. Decrease CAC by optimizing high-converting channels, improving funnel conversion, and investing in organic acquisition. Improving both compounds: a 20% LTV lift plus 15% CAC reduction moves a 2.5:1 ratio to roughly 3.5:1.
Related Calculators
LTV Calculator
Estimate the total revenue a customer generates over their relationship with your business.
CAC Calculator
Measure how much you spend to acquire each new customer by dividing total acquisition spend by new customers acquired.
CAC Payback Period
Find how many months it takes to recover the cost of acquiring a customer through their gross margin contribution.
Break-even ROAS
Determine the minimum ROAS required to break even after accounting for gross margin and other variable costs.