SaaS LTV to CAC Ratio & Unit Economics Calculator
Simulate Customer Lifetime Value, CAC efficiency, and months to recover acquisition spend for recurring revenue businesses.
Parameters & Config
Average monthly subscription fee billed per active customer
Percentage of customers cancelling their subscription each month
Total sales and marketing expenditure required to acquire one customer
Percentage of subscription revenue retained after hosting and direct support costs
Total gross profit generated per customer over their active lifecycle
Benchmark metric for SaaS efficiency (Ideal: 3.0x to 5.0x)
Key Metrics & Sub-Totals
3 itemsCalculation Summary & Unit Breakdown
| Metric | Calculated Value | Notes / Logic |
|---|---|---|
| Monthly ARPU (Revenue/User) | $79.00 | Per user/month |
| Monthly Churn Rate | 3.5% | Customer attrition |
| Gross Margin Percentage | 80% | Cost of service deducted |
| Customer Lifespan | 28.6 months | 1 / Churn rate |
| Customer Acquisition Cost (CAC) | $450.00 | Blended marketing + sales |
| Customer Lifetime Value (LTV) | $1805.71 | Total gross profit per customer |
| LTV to CAC Health Ratio | 4.01x | Benchmark: >3.0x |
| CAC Payback Period | 7.1 months | Benchmark: <12 months |
| Net LTV Profit Contribution | $1355.71 | LTV minus CAC |
Overview & Methodology
The LTV:CAC ratio measures the return on investment of sales and marketing expenditure in a subscription SaaS company. A healthy ratio is between 3.0x and 5.0x. Ratios below 3.0x indicate unsustainable acquisition costs, while ratios above 5.0x suggest underinvestment in growth.
Mathematical Formulation
LTV = (ARPU × Gross Margin %) / Monthly Churn Rate. LTV:CAC = LTV / CAC. CAC Payback (Months) = CAC / (ARPU × Gross Margin %).Optimization Best Practices
Aim for a CAC payback period under 12 months for self-serve B2B SaaS to maintain cash efficiency.
Reduce churn by just 1% to see disproportionate exponential increases in customer lifetime value.
Segment your LTV:CAC calculations by acquisition channel (e.g., Organic Search vs. Paid Google Ads vs. Cold Outbound).
Frequently Asked Questions
Q.What is considered a good LTV:CAC ratio in SaaS?
3.0x is the venture capital benchmark for a healthy SaaS business. 4.0x to 5.0x indicates outstanding capital efficiency.
Q.How is Customer Lifetime Value (LTV) calculated?
LTV is calculated as (Monthly ARPU × Gross Margin %) divided by the Monthly Churn Rate.
Q.What is an acceptable CAC payback period?
For self-serve SaaS, 6 to 12 months is ideal. For enterprise contracts with annual upfront billing, up to 18 months is acceptable.