What is a good LTV:CAC ratio?

A 3:1 ratio is the industry benchmark — you earn 3x what you spend to acquire a customer. Below 1:1 means you're losing money on each customer. Above 5:1 might mean you're under-investing in growth.

How is LTV calculated?

LTV = (ARPU × Gross Margin) / Churn Rate. ARPU is your average monthly revenue per user, gross margin is revenue after direct costs, and churn rate is the monthly percentage of customers who cancel.

What is CAC payback period?

CAC payback is how many months it takes to recover the cost of acquiring a customer. Calculated as CAC / (ARPU × Gross Margin). Under 12 months is ideal for SaaS; 12-18 months is acceptable.

How do I reduce churn?

Focus on onboarding experience, proactive customer success, product-led growth, analyzing churn reasons, building switching costs, and improving the core product based on churned-user feedback.

What if my churn rate is 0%?

If churn is 0%, LTV becomes infinite (theoretically). In practice, all businesses have some churn. Even 0.5% monthly churn means a 200-month average lifetime. Use your best estimate.

SaaS LTV:CAC Calculator

Evaluate your SaaS unit economics with LTV, CAC payback, and LTV:CAC ratio.

Revenue Metrics

ARPU (Monthly)

₹

Average Revenue Per User per month.

Monthly Churn Rate

Percentage of customers who cancel each month.

Gross Margin

Revenue after direct costs (COGS).

Acquisition

Customer Acquisition Cost

₹

Total cost to acquire one new customer.

LTV:CAC Ratio

0.0:1

₹0

Lifetime Value

0.0 mo

CAC Payback

LTV

₹0

CAC

₹500

Avg Lifetime

0.0 mo

Payback

0.0 mo

— 0.0:1 ratio

Documentation

How It Works

LTV represents the total revenue you can expect from a customer over their lifetime. The LTV:CAC ratio tells you if you're spending efficiently to acquire customers.

Formula

Loading formula…Loading formula…

Loading formula…

Frequently Asked Questions

How to Use

About the SaaS LTV:CAC Calculator

What it calculates

This saas ltv:cac calculator models key business metrics for startups and small companies. Evaluate SaaS unit economics with LTV:CAC ratio.

When to use it

Use when forecasting runway, pricing, margins, or growth to support business planning.

Example

Adjust the inputs above to model your specific scenario with the SaaS LTV:CAC Calculator.

Explore More

SaaS LTV:CAC Calculator

0.0:1

₹0

0.0 mo

How It Works

Formula

About the SaaS LTV:CAC Calculator

Related Calculators

Break-Even Calculator

Burn Rate & Runway Calculator

Burn Rate Calculator

Churn Rate Calculator

Discount Impact Calculator

IRR Calculator