LTV:CAC Ratio Calculator
Calculate Customer Lifetime Value to Customer Acquisition Cost ratio
Customer Metrics
Enter your customer economics data
Typically 1 / churn rate. E.g., 3% churn = 33 months
Typically 70-80% for SaaS businesses
Total sales & marketing cost per new customer
Healthy Ratio: 3:1 is ideal. This means you earn $3 for every $1 spent acquiring customers. Payback period should be under 12 months for sustainable growth.
Understanding LTV:CAC Ratio
Ratio Benchmarks
- 3:1 or higher: Excellent - Healthy unit economics
- 2:1 to 3:1: Good - Acceptable but room for improvement
- 1.5:1 to 2:1: Concerning - Focus on optimization
- Below 1.5:1: Unsustainable - Immediate action needed
Improvement Strategies
- Increase LTV: Upsells, cross-sells, reduce churn
- Reduce CAC: Optimize conversion, improve targeting
- Improve Margins: Reduce COGS, increase pricing
- Extend Lifetime: Better onboarding, customer success
Formula
LTV = (Average Monthly Revenue × Customer Lifetime in Months) × Gross Margin
Ratio = LTV ÷ CAC