LTV:CAC Ratio Calculator
The single number that tells you whether your unit economics work.
Unit economics
liveLTV:CAC ratio
LTV : CAC
x
Industry benchmark
0x1x3x5x+
Health
How to use this calculator
- Enter your blended LTV in dollars. Use a multi-cohort blended average for accuracy.
- Enter your blended CAC in dollars. Include fully-loaded sales and marketing costs.
- Pick your industry. Benchmarks differ — SMB targets are higher than Enterprise.
- Read the ratio and health label. Aim for 3x+; investigate immediately if below 1x.
Calculation method
LTV : CAC Ratio = LTV / CAC
A 3:1 ratio is the SaaS gold standard popularized by David Skok. The ratio is most predictive when both LTV and CAC use the same time period and gross-margin assumptions.
- < 1.0x — unsustainable, each customer destroys value
- 1.0-3.0x — building, refine churn and margin
- 3.0-5.0x — healthy, the SaaS sweet spot
- 5.0x+ — excellent, possibly under-investing in growth
Frequently Asked Questions
The industry consensus is 3:1 — meaning a customer generates three times their acquisition cost in lifetime value. Below 1:1 you are losing money on every customer. Above 5:1 can signal you are under-investing in growth and leaving market share on the table.
LTV = ARPU x Gross Margin / Monthly Churn Rate. For example, $100 ARPU at 80% margin and 2% monthly churn yields $4,000 LTV. Use our LTV Calculator to compute this from your unit economics.
CAC = (Sales Spend + Marketing Spend) / New Customers Acquired in the same period. Include all fully-loaded costs: salaries, commissions, ads, content, tools, and overhead. Use our CAC Calculator for a structured walkthrough.
No. SMB SaaS often targets 4-5:1 because churn risk is higher and gross margins lower. Enterprise SaaS can operate sustainably at 3:1 given longer retention and higher ACVs. Vertical SaaS sometimes targets 5:1+ due to limited market size.
Stop. A ratio below 1.0x means every new customer destroys value. Audit: (1) Are you including all CAC costs? (2) Is your churn assumption realistic? (3) Are you mixing time units (annual LTV with monthly CAC)? Then prioritize churn reduction over more acquisition.
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Business & SaaS Disclaimer
Calculations are estimates for educational purposes. LTV:CAC ratios are sensitive to churn and margin assumptions. SaaSCalcHub is not business or financial advice. Consult business advisors, CPAs, and consultants for your specific situation.
Last updated: May 26, 2026