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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)CAC guide: formula, payback, fully-loaded CAC, and LTV:CACUnit economics guide: ARR, CAC, LTV, payback, and growth efficiencyBlended CAC vs paid CAC: when each is the right metric
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Average revenue per account (monthly).
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%
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Tip: you can type commas (e.g., 10,000).
Next action
Read ratio quality and payback together
Use this result as a decision signal, not a final verdict. A solid LTV:CAC ratio can still hide cash stress if payback is slow or if churn assumptions are too generous.
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
Read ratio and payback together
- Treat the ratio as incomplete on its own. A high LTV:CAC can still be weak if CAC payback is slow and cash comes back too late.
- A lower ratio can still be workable when payback is fast, churn is controlled, and the company can recycle capital quickly.
- Read LTV, payback, and ratio together before deciding whether a channel or segment is truly scalable.
When a good ratio can still mislead you
- Blended numbers can hide weak cohorts. Segment by channel, plan, or customer type before trusting a strong headline ratio.
- Definition mismatch can inflate confidence: gross-margin LTV should be compared to a CAC definition that matches the decision you are making.
- If the ratio looks healthy but the business still feels cash-constrained, inspect payback, gross profit per month, and cohort retention before raising spend.
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.