LTV:CAC Ratio Calculator
Check whether acquisition spending pays off relative to customer lifetime value—and how many months CAC takes to recover.
Calculator
From the LTV Calculator.
From the CAC Calculator.
Monthly ARPU used to estimate CAC payback months.
Results
LTV:CAC ratio
5x
Common SaaS target is ~3x+
CAC payback
8 mo
Months to recover CAC from margin-adjusted ARPU
What this means
LTV:CAC at ~3x+ is a commonly cited SaaS efficiency target. Confirm LTV and CAC definitions match before celebrating.
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LTV:CAC Ratio Summary
LTV:CAC = LTV ÷ CAC. A common SaaS target is about 3× or higher. Payback months ≈ CAC ÷ (ARPU × gross margin).
Explanation
LTV:CAC ratio compares lifetime value to acquisition cost.
CAC payback estimates months to earn back CAC from margin-adjusted monthly ARPU.
Business implication: growth that fails payback targets eventually stalls—even if top-line MRR rises.
Step-by-step example
LTV $4,000, CAC $800, ARPU $125, margin 80%:
- Ratio: $4,000 ÷ $800 = 5.0x
- Monthly contribution: $125 × 0.80 = $100
- Payback: $800 ÷ $100 = 8 months
Formula
LTV:CAC = LTV ÷ CAC
Payback months = CAC ÷ (ARPU × Gross margin)
Helpful tips
- Compute LTV and CAC with the dedicated calculators first, then paste results here.
- Watch payback alongside the ratio—high LTV:CAC with 24-month payback can still strain cash.
FAQ
What is a good LTV:CAC ratio?
Many SaaS teams aim for roughly 3:1 or higher as a healthy rule of thumb. Much lower can mean unprofitable growth; much higher can mean under-investing in acquisition.
What is CAC payback?
Payback months estimate how long gross-margin-adjusted ARPU takes to recover CAC: CAC ÷ (ARPU × gross margin).
Do LTV and CAC need the same time window?
Yes for decision-making—use consistent definitions and recent cohorts so the ratio is apples-to-apples.
How accurate is this calculator?
The ratio is exact for the LTV and CAC you enter. Quality depends on how those inputs were measured.
Related tools
Key terms
LTV:CAC ratio
Definition. How customer lifetime value compares to what it costs to acquire that customer.
In simple terms. A higher ratio generally means acquisition is more efficient—though “good” targets depend on margins, payback period, and growth stage. It is a directional health check, not a law.
LTV:CAC = LTV ÷ CAC
Example. LTV $800 and CAC $200 → 4:1 LTV:CAC.
Common mistake. Optimizing the ratio by under-investing in growth, or comparing ratios built with different LTV definitions.
Related calculators. LTV:CAC Ratio Calculator, LTV Calculator, CAC Calculator
LTV
Definition. Customer lifetime value—estimated gross profit (or revenue, depending on model) from a customer over the relationship.
In simple terms. LTV helps you decide how much you can spend to acquire a customer. Simple models use average revenue, margin, and lifespan or churn.
Common simple form: LTV ≈ ARPU × gross margin × average customer lifespan
Example. $50/month, 70% margin, 24-month average life → LTV ≈ $840 in that model.
Common mistake. Using revenue LTV against costs that need gross-profit LTV—or ignoring churn.
Related calculators. LTV Calculator, LTV:CAC Ratio Calculator
Related terms. CAC, LTV:CAC ratio, MRR
CAC
Definition. Customer acquisition cost—what you spend, on average, to win one new customer.
In simple terms. CAC usually includes ads, sales time, tools, and related acquisition spend for a period, divided by new customers won in that period.
CAC = acquisition spend ÷ new customers acquired
Example. $5,000 marketing spend and 25 new customers → $200 CAC.
Common mistake. Excluding sales labor or counting leads instead of paying customers.
Related calculators. CAC Calculator, LTV:CAC Ratio Calculator
Related terms. LTV, LTV:CAC ratio, ROI
Notes & Assumptions
LTV:CAC and CAC payback are standard SaaS unit-economics guardrails for growth spending.
Last reviewed: July 2026