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LTV to CAC Ratio Calculator for SaaS & Subscriptions

Calculate customer lifetime value, customer acquisition cost, LTV:CAC ratio and CAC payback months from your revenue, margin, churn and marketing spend.

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Share of customers who cancel each month.

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LTV : CAC

4.9 : 1

Customers stay about 25.0 months on average.

Lifetime value (LTV)
$980
Acquisition cost (CAC)
$200
CAC payback
5.1 months
Gross profit / month
$39.20

Healthy

3:1 or better is the common rule of thumb. You can afford to spend more to grow.

The formulas

  • Customer lifetime (months) = 1 ÷ monthly churn
  • LTV = monthly revenue per customer × gross margin ÷ monthly churn
  • CAC = sales & marketing spend ÷ new customers
  • CAC payback (months) = CAC ÷ (monthly revenue per customer × gross margin)

Example

$49/month, 80% margin, 4% monthly churn: customers stay 25 months and each is worth $980 in gross profit. Spending $8,000 to win 40 customers makes CAC $200, an LTV:CAC of 4.9:1 and a payback of about 5 months.

How to improve the ratio

  • Lower churn. It sits in the denominator, so small improvements have a big effect on LTV.
  • Find your cheapest good channel. Look at which sources bring customers who stay, not just signups.
  • Raise prices or add plans. Higher revenue per customer shortens payback directly.

Frequently asked questions

How is LTV calculated here?+

Average monthly revenue per customer × gross margin ÷ monthly churn. With $50/month, 80% margin and 4% churn, LTV is $1,000.

How is CAC calculated?+

Total sales and marketing spend in a period divided by the new customers won in that period.

What is a good LTV:CAC ratio?+

3:1 is the usual benchmark. Below 1:1 you lose money on every customer; well above 5:1 can mean you're growing slower than you could.

What is CAC payback?+

How many months of gross profit it takes to earn back what you paid to acquire a customer. Under 12 months is generally considered healthy for SaaS.

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