LTV:CAC Ratio Calculator

Calculate LTV:CAC ratio from lifetime value and acquisition cost, or derive LTV from ARPA, gross margin, and churn.

Last reviewed May 27, 2026 by CalcMastery Editorial Team; Reviewed by CalcMastery Finance Review Team

LTV:CAC Ratio Calculator (SaaS)

Essential SaaS unit economics: compute LTV:CAC ratio and CAC payback using direct inputs or a churn-based best-practice model. Includes clean scenarios and guidance.

SaaS (Churn‑based)SaaS (Lifespan)Direct Inputs

Choose how to estimate LTV. Churn‑based is recommended for subscription SaaS. Direct Inputs hides monthly contribution and payback.

$

Average revenue per user per month (same currency as CAC).

%

Contribution margin after variable costs. Example: 75%.

%

Share of customers who cancel each month. Example: 4%.

ON: Uses NPV (lifetime months = 1 / (churn + monthly discount)) → more conservative LTV. OFF: Uses non‑discounted lifetime (1 / churn).

%

Annual discount, converted to monthly and added to churn in NPV mode. Typical 8–12%.

Expected active months for the average customer.

$

If you already know LTV, enter it directly.

$

Average cost to acquire a new customer (marketing + sales).

Try scenarios
SaaS presets: Early‑stage / Mid‑market / PLG self‑serve
Early‑stage SaaSMid‑market SaaSPLG Self‑serve

Results

  • LTV:CAC (x)—
  • Category—
  • CAC Payback (months)—
  • Lifetime Value (LTV)$
  • Monthly Contribution$
  • Lifetime Revenue (pre‑margin)$
  • CAC$
  • Surplus over CAC$
  • Model Used—

Enter your inputs above to calculate the results.

Use this LTV:CAC ratio calculator to measure whether customer lifetime value supports your acquisition cost. Enter LTV and CAC directly, or build LTV from revenue, gross margin, and churn assumptions when available. The result gives the LTV:CAC multiple used to judge SaaS unit economics, growth quality, and payback discipline.

What is LTV:CAC Ratio?

The LTV:CAC ratio compares customer lifetime value (LTV) with customer acquisition cost (CAC) to show how efficiently a business converts acquisition spend into long-term gross profit.

In SaaS and subscription models, this ratio anchors unit economics: it links monetization, retention, churn, gross margin, and acquisition efficiency into a single signal of whether growth is value-accretive or value-destructive.

Operators and investors generally consider 3:1 healthy; below 2:1 signals inefficient spend, while very high ratios can indicate under-investment in growth despite strong retention and monetization.

Formula

LTV:CAC Ratio = LTV / CAC
LTV = (ARPU × Gross Margin) / Churn Rate
CAC = Sales & Marketing Spend / New Customers Acquired

Example

A SaaS product has:

  • ARPU: $50 / month
  • Gross margin: 75%
  • Monthly churn: 4%
  • CAC: $150

LTV = (50 × 0.75) / 0.04 = $937.50

LTV:CAC = 937.50 / 150 = 6.25:1

This ratio reflects high-efficiency growth, strong retention economics, and headroom to scale acquisition while staying comfortably above the 3:1 benchmark.

Related calculators and references

How to Use the LTV:CAC Ratio Calculator

Use this calculator to estimate customer lifetime value (LTV), compare it to your customer acquisition cost (CAC), and see whether your SaaS unit economics are strong enough to scale.

Select the calculation model

  • At the top, pick SaaS (Churn-based), SaaS (Lifespan), or Direct Inputs depending on whether you want LTV derived from churn, from average lifespan, or entered directly.

Enter your revenue and retention inputs

    • For Churn-based, type your Monthly ARPU, Gross Margin %, and Monthly Churn Rate %.

- For Lifespan, enter Monthly ARPU, Gross Margin %, and Average Lifespan (months). - For Direct Inputs, just enter your Lifetime Value (LTV).

Add CAC and optional discount rate

    • Fill in CAC (Customer Acquisition Cost) for all models.

- In the churn-based model, use the Apply Discount Rate (NPV) toggle and Annual Discount Rate % if you want an NPV-adjusted LTV based on the formula:

LTV:CAC Ratio = LTV / CAC

Review the results panel

  • Check the LTV:CAC (x) value and the Category label to see whether your ratio is weak, acceptable, or excellent, then look at CAC Payback (months), Lifetime Value (LTV), Monthly Contribution, Lifetime Revenue, and Surplus over CAC to understand profitability per customer.

Iterate scenarios and compare

  • Use the “Try scenarios” presets (if available) or tweak ARPU, churn/lifespan, margin, CAC, and discount rate to see how changes in pricing, retention, or acquisition efficiency shift your LTV:CAC and payback before committing budget.

Frequently Asked Questions

These FAQs explain LTV, CAC, churn-based LTV, gross margin, and what LTV:CAC ranges usually imply.

What LTV:CAC ratio should I aim for with this calculator?

As a rule of thumb, a ratio around 3:1–4:1 is considered healthy: you generate $3–$4 in lifetime value for every $1 spent on CAC. Ratios below 1:1 mean you’re losing money on each customer, while numbers above ~5:1 often signal that you’re under-investing in growth rather than being “super efficient.”

When should I use the SaaS (Churn-based) vs SaaS (Lifespan) vs Direct Inputs models?

Use SaaS (Churn-based) if you track monthly churn and margin; this follows the common formula LTV = ARPU × Gross Margin ÷ Churn Rate, optionally adjusted by a discount rate. Use SaaS (Lifespan) if you have a solid estimate of average customer lifespan in months (LTV ≈ ARPU × Gross Margin × Lifespan). Use Direct Inputs when you already know LTV and CAC from your own modeling and just want the ratio and surplus.

Why does the calculator also show CAC payback in months alongside the LTV:CAC ratio?

LTV:CAC tells you how profitable each acquired customer is over their lifetime, but CAC payback shows how fast you recover your acquisition spend. Investors and operators look at both: a strong ratio with a very long payback can still strain cash, while a quick payback with a weak ratio can cap long-term profitability.

What does the “Apply Discount Rate (NPV)” toggle actually change in my LTV:CAC results?

Turning this on discounts future monthly cash flows back to today using your annual discount rate, so LTV is lower but more realistic for long lifetimes or higher risk. It’s useful for later-stage SaaS or when capital has a real cost; early-stage teams often look at the non-discounted version first, then sanity-check with NPV-adjusted LTV.

Sources & Methodology