SaaS LTV/CAC Calculator
Calculate your SaaS Customer Lifetime Value (LTV) to Customer Acquisition Cost (CAC) ratio to evaluate business health.
Real-time Results
Target is 3:1 or higher
Months to recover acquisition cost
Total profit expected per customer
Detailed Metrics & Health
Deeper look into your business fundamentals
| Item | Value |
|---|---|
| Business Health Strong unit economics. You are ready to scale! | Excellent |
| Monthly Gross Profit / User Revenue minus direct costs | $40.00 |
| Avg. Customer Lifespan Based on your monthly churn rate | 20.0 months |
Disclaimer
The calculation results of this financial tool are for estimation and research reference only and do not constitute any investment advice or commitment. Actual rates and yields are subject to the final contract with the financial institution.
Why Choose SaaS LTV/CAC Calculator
The LTV/CAC ratio is the ultimate metric for measuring the sustainability and profitability of a SaaS (Software as a Service) business. By calculating the Customer Lifetime Value (LTV) and comparing it against the Customer Acquisition Cost (CAC), founders and investors can instantly determine if a company's growth model is viable. A ratio of 3:1 or higher is generally considered the gold standard for a healthy SaaS business.
- ✓Calculate true LTV adjusted for Gross Margin, not just raw revenue
- ✓Instantly evaluate your LTV:CAC Ratio against the 3:1 industry benchmark
- ✓Determine your CAC Payback Period (Months to recover acquisition costs)
How to Calculate
- 1Enter your Average Revenue Per User (ARPU) per month.
- 2Enter your Gross Margin percentage (typically 70-90% for SaaS).
- 3Enter your Monthly Customer Churn Rate.
- 4Enter your Customer Acquisition Cost (CAC).
Frequently Asked Questions (FAQ)
Why is Gross Margin included in the LTV calculation?
A common mistake founders make is calculating LTV based purely on revenue. If a customer pays you $100 but it costs $20 in server and support costs to serve them, your gross margin is 80%. Your true LTV must account for this cost of goods sold (COGS) to accurately reflect the actual profit generated over the customer's lifespan.
What is a 'good' LTV:CAC Ratio?
An LTV:CAC ratio of 3:1 is considered the benchmark for a healthy SaaS business. This means you make $3 in profit for every $1 spent acquiring a customer. A ratio of 1:1 means you are losing money (when accounting for operating expenses). A ratio of 5:1 or higher means you might be under-investing in marketing and leaving growth on the table.
What is a healthy CAC Payback Period?
The CAC Payback Period is the number of months it takes for a customer to generate enough gross profit to cover their acquisition cost. For startups and SMBs, a payback period of 12 months or less is excellent. Enterprise SaaS companies can often sustain longer payback periods (18-24 months) due to multi-year contracts.
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