LTV to CAC Ratio Calculator (SaaS Unit Economics)
Enter monthly revenue per customer, gross margin, churn and acquisition cost.
Your numbers
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Your results
Customer lifetime value (LTV)
Customer lifetime value (LTV)
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LTV:CAC ratio
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CAC payback (months)
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Average customer lifetime (months)
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Verdict
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LTV to CAC Ratio Calculator (SaaS Unit Economics) by TheCalcTools
How the LTV to CAC Ratio Calculator (SaaS Unit Economics) works
Lifetime value is the gross profit a customer brings over their lifetime: monthly gross margin per customer ÷ monthly churn. CAC is all sales and marketing spend divided by new customers won.
A common SaaS rule of thumb is LTV:CAC of at least 3 and CAC payback under 12 to 18 months.
The formula
LTV = ARPA × gross margin ÷ churn; payback = CAC ÷ (ARPA × gross margin)
Worked example
Using the default values shown in the calculator:
| Monthly revenue per customer (ARPA) | $120 |
|---|---|
| Gross margin | 78 % |
| Monthly churn | 2.5 % |
| Customer acquisition cost (CAC) | $1400 |
- 120 × 78% = $93.60 gross margin a month; at 2.5% churn LTV = $3,744.
- LTV:CAC = 2.67, payback 15.0 months.
Result:
| Customer lifetime value (LTV) | $3,744 |
|---|---|
| LTV:CAC ratio | 2.67 |
| CAC payback (months) | 15.0 |
| Average customer lifetime (months) | 40.0 |
| Verdict | Marginal (1 to 3) |
Frequently asked questions
Why use gross margin and not revenue?
Serving customers costs money. Using revenue overstates what each customer is worth.
Sources and further reading
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This calculator gives estimates for information only. Check important results independently before you rely on them. See our disclaimer.