SaaS metrics

LTV:CAC Ratio Calculator

Work out the lifetime value of a customer, compare it against what you paid to acquire them, and see whether your ratio clears the 3x benchmark. Enter four numbers; the result updates as you type. Nothing is stored and there is no signup.

LTV : CAC ratio

Excellent

6.60x

Efficient growth. You may be underinvesting in sales and marketing — consider spending more to grow faster.

LTV $2,640 per customer, from $79.20 of gross profit per month.

Customer lifetime: 33.3 months
Gross profit / customer / mo: $79.20
CAC payback: 5.1 months

LTV:CAC ratio benchmarks

LTV:CAC answers one question: for every dollar spent acquiring a customer, how many dollars of gross profit come back over that customer's life? Below 1x you lose money on every sale; 3x is the long-standing rule of thumb; above 5x usually means you are underinvesting in growth.

Segment	Typical LTV:CAC	Best-in-class
Early-stage B2B SaaS Often noisy while the customer base is small; track the trend, not a single month.	2.5x - 3x	4x+
Growth-stage B2B SaaS The range most boards and Series A investors expect to see.	3x - 4x	5x+
Self-serve / PLG products Lower CAC pushes the ratio up, but the denominator is easy to under-state.	3x - 4.5x	5x+
Enterprise SaaS Long sales cycles mean CAC is lumpy; use a rolling 12-month figure.	3x - 5x	6x+
Marketplaces & consumer subscriptions High churn compresses LTV; payback speed matters more than the ratio here.	2x - 3x	4x+

Ranges reflect commonly cited venture and operator guidance (Bessemer, OpenView, a16z) rather than a single proprietary dataset. Treat them as sanity checks, not targets.

Frequently asked questions

What is a good LTV:CAC ratio?

Three to one is the long-standing rule of thumb: every dollar spent acquiring a customer should return three dollars of gross profit over that customer’s lifetime. Below 1x you lose money on every sale. Between 1x and 3x the business is viable but slow. Above 5x you are usually underinvesting — a healthy company can often spend more on growth and still stay above 3x.

Should LTV be based on revenue or gross profit?

Gross profit. This is the definition the 3x rule of thumb assumes. Using raw revenue makes LTV look roughly 1/gross-margin times larger than it really is — at an 80% margin that is a 25% overstatement, and at a 50% margin a 100% one. This calculator multiplies ARPU by gross margin before computing lifetime value, so the ratio stays comparable to published benchmarks.

How do I calculate customer lifetime from churn?

For a constant monthly churn rate, average lifetime in months is 100 divided by the monthly churn rate as a percentage. A 2% monthly churn rate implies a 50-month average lifetime; 5% implies 20 months. Note this is an average across a cohort, not a prediction about any individual customer, and it assumes the churn rate stays flat.

What should be included in CAC?

All sales and marketing costs divided by the number of new customers won in the same period: salaries and commissions for sales and marketing staff, advertising spend, content and SEO costs, tooling specific to those teams, and any onboarding or implementation cost you absorb. Excluding salaries is the most common reason CAC looks artificially low.

Why is my LTV:CAC ratio infinite or blank?

Two inputs can produce an unbounded result. If CAC is zero, the ratio divides by zero and is mathematically infinite — enter a CAC above zero. If the monthly churn rate is zero, customer lifetime is infinite and so is LTV. Real cohorts always churn eventually, so use a small non-zero rate such as 0.5% for planning.

Does this calculator store my numbers?

No. All calculation happens in your browser and nothing is sent to a server. There is no signup, no account and no database. Refreshing the page resets the form to the example values.

How the LTV:CAC ratio works

The formula

Lifetime value is the total gross profit a customer generates before they leave. Each piece is simple:

lifetime (months)      = 100 / monthly churn rate %
gross profit per month = arpu * (gross margin % / 100)
LTV                    = gross profit per month * lifetime (months)
LTV:CAC ratio          = LTV / CAC

A worked example. Suppose ARPU is $99 per month, gross margin is 80%, monthly churn is 3% and CAC is $400:

Lifetime = 100 / 3 = 33.3 months
Gross profit per month = 99 × 0.80 = $79.20
LTV = 79.20 × 33.3 = $2,640
LTV:CAC = 2,640 / 400 = 6.6x

At 6.6x this business is acquiring customers very efficiently — arguably too efficiently, since it is leaving growth on the table. Spending more on acquisition and landing at 4x would grow revenue faster.

Why gross profit, not revenue

The 3x benchmark assumes LTV is measured in gross profit. If you compute LTV from raw revenue instead, the ratio inflates by roughly the inverse of your margin — at 80% margin your reported ratio is 25% too high. That is the difference between believing you are at 4x and actually being at 3.2x. Because the multiplier is a single / 100 conversion, this calculator takes the margin as a plain percentage (enter 80, not 0.8) and applies it in one place so the two calculators on this site can never disagree.

Common mistakes

Leaving salaries out of CAC. If CAC only counts ad spend, a company with a sales team will show a spectacular ratio that bears no relation to reality. Fully loaded means fully loaded.
Mixing acquisition cohorts. CAC and MRR must come from the same period and the same customers. Dividing this month’s spend by last quarter’s signups produces a meaningless number.
Treating churn as linear. A 3% monthly churn rate does not mean customers last 33 months of calendar time in a cohort sense — it is an average across a distribution where most leave early.
Reading one month. The ratio swings on small numbers. Use a rolling three-month average before making a decision about spend.
Ignoring the payback period. A 6x ratio with a 30-month payback still drains cash. Check the CAC payback calculator alongside this one.

How to use the result

Below 1x: stop increasing acquisition spend. Fix the unit economics first — raise price, improve margin, or reduce churn.
1x to 3x: the business works but growth is expensive. Small improvements in retention compound, because reducing churn raises both lifetime and LTV.
3x to 5x: the sustainable zone. Scale spend while monitoring that the ratio holds as you exhaust the cheapest channels.
Above 5x: you can probably afford to grow faster. Test incrementally — ratios fall as you move into more expensive channels.

Related calculators

This ratio depends on two numbers that each have their own page: churn rate drives the lifetime, and MRR and ARPU drive the revenue per customer. If your ratio is weak, check which of the two is responsible before changing anything.

How the LTV:CAC formula is derived

Step 1 — lifetime, from churn

Customers do not leave on a schedule; each month a constant fraction c of the remaining base leaves. The proportion still present after m months is therefore (1 - c)^m. The average lifetime is the area under that curve, which for a constant decay rate is the geometric series:

average lifetime (months) = 1 / c = 100 / churn rate %

So 3% monthly churn gives 100 / 3 = 33.3 months. The 100 appears only because churn is entered as a percentage; the algebra is 1 ÷ 0.03.

Step 2 — what a customer is worth per month

Revenue per month is ARPU, but only the gross-profit part of it is yours to keep. Delivery costs — hosting, support, payment processing — are the cost of goods sold, so:

gross profit per month = ARPU × (gross margin % / 100)

Step 3 — multiply

LTV is the monthly margin multiplied by the number of months it is received:

LTV = ARPU × (gross margin % / 100) × (100 / churn rate %)

The two / 100 factors do not cancel in general, which is the point. They cancel only at a 100% margin, and that is exactly why the shortcut “ARPU ÷ churn rate” — which is this formula with the margin quietly set to 100% — overstates LTV by 1 / margin.

Step 4 — divide by CAC

LTV:CAC = LTV / CAC

Both numerator and denominator are now in the same units (gross-profit dollars per customer, and acquisition dollars per customer), so the ratio is dimensionless and comparable across companies. Dividing a revenue-based LTV by a gross-profit-based CAC — or the reverse — is the error that makes the ratio look two to three times better than it is.

Assumptions and where this breaks

Every model is wrong somewhere. These are the assumptions baked in here, and the situations in which you should not trust the number that comes out.

Assumes

The subscription price and cost of delivery are flat for the life of the customer — ARPU does not rise with usage or fall with a renewal discount.
Churn is constant at the rate you enter. Lifetime is 100 ÷ monthly churn, which is the mean of an exponential decay, not a schedule.
LTV is measured in gross profit, so the acquisition cost and the delivery cost are not double-counted: CAC is compared against margin, not against revenue.
CAC and churn come from the same period and describe the same population of customers.

Does not apply when

You have fewer than roughly 100 customers in the cohort — the ratio is dominated by noise and moves wildly month to month.
Churn is not flat: if most losses happen in the first 90 days, the exponential lifetime overstates true retention and therefore overstates LTV.
There is meaningful expansion revenue. A customer whose spend grows 5% a month is worth far more than the flat-ARPU model here implies.
You sell a usage-based, transactional or marketplace product where revenue is not contractually recurring — a “lifetime value” exists but the MRR framing does not fit.
The acquisition mix changed recently. A CAC blended across a discontinued channel and a new one describes a company that no longer exists.

Edge cases handled explicitly

Churn of 0% produces an infinite lifetime and an infinite LTV; the calculator labels it rather than printing a fabricated number.
CAC of 0 produces an infinite ratio, correctly — you cannot lose money on a sale that cost nothing to make.
Gross margin is a percentage (enter 80, not 0.8); a single / 100 conversion shared with the CAC payback calculator keeps the two pages in agreement.
Infinity and NaN are never rendered as a blank cell or as “∞”.

Where the benchmark numbers come from

The bands in the table above are drawn from the following published sources. They are orientation figures published for the whole industry, not a proprietary dataset and not a target — your own segment, stage and three-month trend matter more than any published band.

Bessemer Venture Partners: Their widely cited cloud-metrics writing is the origin of the “3x is healthy, above 5x you may be underinvesting” reading used in the benchmark table.
OpenView Partners: Published SaaS benchmark reports that treat LTV:CAC as a gross-profit measure, which is the convention this calculator follows.
Commonly cited operator guidance: The 1x/3x/5x bands are repeated in most SaaS fundraising primers. They are a sanity check for orientation, not a proprietary dataset.

Where no single institution publishes a figure, this page says so and labels it commonly cited rather than attributing it to a named firm. Nothing on this site is presented as proprietary data we collected.

These six tools are designed to be read as one chain, not six separate numbers:

LTV:CAC → CAC Payback → Quick Ratio → MRR → Churn → Runway

Each tool in the chain is a pure function of the ones before it, which is why the six share one formula module and one set of benchmark bands — the same inputs on different pages cannot disagree here.

Maintained by The SaaS Metrics Calculators Editorial Team

Maintained by the site’s editors, with every formula unit-tested and every benchmark traced to a published source

Formulas and benchmarks last reviewed October 2026.

This page is educational. Every figure is computed in your browser from the inputs you supply, and nothing is checked against your own accounts — treat results as a planning aid, not as financial advice.