LTV:CAC Calculator
Compute LTV:CAC ratio and CAC payback using ARPA, gross margin, churn, and CAC.
LTV:CAC is a shortcut metric for unit economics: how much gross profit you earn over the expected lifetime relative to what you paid to acquire the customer.
This calculator keeps definitions consistent by computing LTV from ARPA, gross margin, and churn, and also reports CAC payback months.
Prefer an explanation- Read the guide.
LTV:CAC ratio: how to interpret the ratio (and avoid mistakes)Unit economics: CAC, payback, LTV, and LTV:CAC (how to model them)Unit economics hub: CAC, LTV, payback, and runway (a practical stack)Blended CAC vs paid CAC: when each is the right metric
$
Average revenue per account (monthly).
$
%
%
Tip: you can type commas (e.g., 10,000).
Example
Using the default inputs, the result is:
10.67:1
- CAC
- $500
- ARPA per month
- $200
- Gross margin
- 80%
- Monthly churn
- 3%
- Target LTV:CAC (optional)
- 3
How to calculate
- Pick a segment (channel/plan/geo) and keep time units monthly.
- Enter CAC and ARPA per month for the segment.
- Enter gross margin and monthly churn for the same revenue base.
- Review LTV, payback months, and the LTV:CAC ratio together.
Formula
LTV = (ARPA * gross margin) / churn; LTV:CAC = LTV / CAC; Payback = CAC / (ARPA * gross margin)
- Uses a constant-churn shortcut model (planning).
- LTV is modeled as gross profit to align with CAC and payback.
- Use segment-level inputs (channel/plan/geo) for decision-making.
Benchmarks
- Many SaaS teams target around 3:1, but the right ratio depends on growth and cash constraints.
- A strong ratio with very long payback can still be risky in volatile channels.
- If churn is underestimated, LTV and LTV:CAC will be overstated (sensitivity matters).
FAQ
What is a good LTV:CAC ratio-
Many SaaS teams target ~3:1, but the right ratio depends on growth rate, cash constraints, churn, and channel mix.
Common mistakes
- Mixing fully-loaded CAC with LTV that excludes gross margin (definition mismatch).
- Using revenue retention as if it were customer churn in a simple churn model.
- Using blended averages that hide weak cohorts (segment before deciding budgets).
How to interpret
Benchmarks (rule of thumb)
- Many SaaS teams target ~3:1, but it depends on growth and cash needs.
- Higher ratios can signal under-investment in growth.
- Lower ratios can be fine if payback is fast and churn is low.
Related calculators
SaaS Metrics
CAC Calculator
Calculate Customer Acquisition Cost (CAC) from total acquisition spend and new customers.
SaaS Metrics
Fully-loaded CAC Calculator
Calculate fully-loaded CAC by including paid spend plus sales & marketing costs (salaries, tools, and other acquisition costs).
SaaS Metrics
LTV Calculator
Estimate customer Lifetime Value (LTV) using ARPA, gross margin, and churn rate.
SaaS Metrics
LTV Sensitivity Calculator
See how gross profit LTV changes as churn and gross margin vary (simple 3x3 sensitivity).
SaaS Metrics
CAC Payback Period Calculator
Estimate how many months it takes to recover CAC (months to recover CAC) using gross profit.
SaaS Metrics
CAC Payback Sensitivity Calculator
See how CAC payback months change as ARPA and gross margin vary (simple 3x3 sensitivity).
Quick checks
- Keep time units consistent (monthly vs annual) across inputs and outputs.
- Segment by cohort/channel/plan before trusting a blended average.
- Use the related guide to avoid common definition and denominator mismatches.