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LTV:CAC Ratio Calculator
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The LTV:CAC ratio is customer lifetime value divided by customer acquisition cost. A ratio of 3:1 or higher is the common benchmark for healthy SaaS growth economics — below 1:1 means you lose money on every customer, and above 5:1 can mean you're under-investing in growth. This calculator returns your ratio instantly from two inputs.
Your LTV:CAC ratio
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How the LTV:CAC ratio is calculated
LTV:CAC ratio = customer lifetime value ÷ customer acquisition cost. If a customer is worth $1,500 over their lifetime and cost $500 to acquire, the ratio is 3:1 — you earn three dollars for every dollar spent acquiring them.
This single number is the clearest signal of whether growth spend is working. A rising CAC or a falling LTV both compress the ratio even when raw revenue still looks fine, so track it alongside top-line growth, not instead of it.
What counts as a good LTV:CAC ratio
3:1 is the widely used SaaS benchmark for healthy unit economics. Below 1:1 means every new customer loses money before you factor in fixed costs. Above 5:1 often means the business is under-spending on growth relative to what customers are worth — a real cost when a faster-growing competitor is willing to spend closer to 3:1.
The right target still depends on payback period and gross margin: a capital-constrained business may need 3:1+ with a fast payback, while a well-funded one can tolerate a lower ratio for a period to buy market share.
FAQ
Questions
What is a good LTV:CAC ratio?
3:1 or higher is the common healthy benchmark for SaaS. Below 1:1 means you lose money on every customer; above 5:1 may signal you're under-investing in growth rather than over-spending.
Should I use gross-margin LTV or revenue LTV?
Use gross-margin LTV (revenue LTV × gross margin %) for a decision-useful ratio — revenue LTV overstates what a customer actually contributes and inflates the ratio.
How often should I recalculate LTV:CAC?
Monthly or quarterly, by cohort. CAC tends to drift up as cheap channels saturate, and LTV shifts with retention — a ratio calculated once a year can mask months of eroding unit economics.
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