LTV:CAC Calculator
Estimate customer lifetime value, acquisition payback, and LTV:CAC ratio from monthly ARPA, gross margin, churn or retention, and CAC.
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Status
Needs improvement
Customers are profitable, but acquisition efficiency is below the typical 3x target.
Customer lifetime
20 mo
Calculated as 1 ÷ monthly churn. Zero churn is shown as not meaningful, not infinity.
Customer LTV
$1,600
Monthly ARPA × gross margin × estimated lifetime.
LTV:CAC ratio
1.60x
Gross profit LTV divided by CAC. SaaS teams often target 3x or higher.
CAC payback
12.5 mo
CAC ÷ monthly gross profit, plus optional sales cycle delay.
Monthly assumptions
Monthly gross profit per customer: $80
Implied monthly churn: 5%
Implied monthly retention: 95%
Approx. annual revenue per account: $1,200
LTV:CAC formula and interpretation
LTV:CAC compares the gross profit you expect from a customer against what it costs to acquire them. This calculator uses monthly inputs, so churn, retention, lifetime, and payback are all expressed in months.
Customer lifetime
1 ÷ monthly churn rate
Gross profit LTV
Monthly ARPA × gross margin × customer lifetime
LTV:CAC
Gross profit LTV ÷ CAC
CAC payback
CAC ÷ monthly gross profit + optional sales cycle delay
How to read the result
Under 1x: Acquisition is value destructive unless there is a strong strategic reason.
1x to 3x: Customers are profitable, but the motion likely needs better retention, pricing, margin, or CAC.
3x to 5x: Generally healthy for SaaS and subscription businesses.
5x+: Very efficient. You may be under-investing in acquisition if growth is constrained.
Need a fuller SaaS model?
LTV:CAC is a quick read on unit economics. For board decks and fundraising, model cohorts, expansion revenue, churn, sales capacity, and cash burn together.
Keep modeling
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Use these next-step tools and Excel templates to turn the quick calculation into a more complete finance workflow.