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LTV:CAC Ratio Calculator

Calculate Customer Lifetime Value, compare it to Customer Acquisition Cost, and determine your CAC payback period to assess business unit economics.

Annual recurring revenue or spend per customer.
Gross margin percentage after direct costs.
Percentage of customers lost per year.
Total sales & marketing spend divided by new customers acquired.

Results

Customer LTV$1,750
LTV:CAC Ratio11.67
CAC Payback Period5.1 months

📖What is it?

LTV (Customer Lifetime Value) is the total gross profit a business can expect from a single customer over their entire relationship. CAC (Customer Acquisition Cost) is how much you spend to acquire one new customer. The LTV:CAC ratio reveals the efficiency and sustainability of your growth engine.

🎯How to use

1. Enter annual revenue per customer and your gross margin %. 2. Set your annual churn rate (1/churn = average customer lifespan in years). 3. Enter your CAC (total S&M spend divided by new customers). The calculator returns LTV, the ratio, and how many months to recoup your CAC.

💡Example scenario

SaaS company: $500 ARR, 70% gross margin, 20% churn. LTV = $500 x 0.7 / 0.2 = $1,750. With $150 CAC, LTV:CAC = 11.67x � exceptional. Payback period = 150 / (500 x 0.7 / 12) = 5.1 months.

🏆Pro tip

LTV:CAC > 3 is the benchmark for healthy SaaS businesses; < 1 means you lose money on each customer. VCs typically look for > 3x with < 18 months payback for Series A. To improve: reduce churn through onboarding improvements, increase ARPU through upsells, or cut CAC by investing in organic/SEO channels.