How to Calculate SaaS LTV:CAC Ratio

What is SaaS LTV:CAC Ratio?

LTV:CAC measures the ratio of customer lifetime value to acquisition cost. A healthy SaaS business needs LTV to significantly exceed CAC - 3x or above is considered healthy.

Formula

LTV = (ARPU x Gross Margin) / Monthly Churn Rate

LTV: 3x is healthy; payback < 12 months is ideal — 3x is healthy; payback < 12 months is ideal

Step-by-Step Guide

1LTV = (ARPU x Gross Margin) / Monthly Churn Rate
2CAC = Total Sales & Marketing spend / New customers acquired
3LTV:CAC >= 3x is healthy; payback < 12 months is ideal

Worked Examples

Input

$100 ARPU, 70% margin, 5% churn, $300 CAC

Result

LTV = $1,400, LTV:CAC = 4.67x - excellent; payback approx 4 months

Frequently Asked Questions

What is Saas Ltv Cac?

LTV:CAC measures the ratio of customer lifetime value to acquisition cost. A healthy SaaS business needs LTV to significantly exceed CAC - 3x or above is considered healthy

How accurate is the Saas Ltv Cac calculator?

The calculator uses the standard published formula for saas ltv cac. Results are accurate to the precision of the inputs you provide. For financial, medical, or legal decisions, always verify with a qualified professional.

What units does the Saas Ltv Cac calculator use?

This calculator works with inches. You can enter values in the units shown — the calculator handles all conversions internally.

What formula does the Saas Ltv Cac calculator use?

The core formula is: LTV = (ARPU x Gross Margin) / Monthly Churn Rate. Each step in the calculation is shown so you can verify the result manually.

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