LTV:CAC Ratio Calculator

LTV:CAC is the classic test of growth sustainability. Around 3:1 is the widely-used benchmark: below it, growth may destroy value; far above it, you may be under-investing in growth.

Inputs

Revenue per customer / period

Gross margin

Customer lifespan (periods)

CAC

Results

LTV:CAC ratio

3.39×

Margin-adjusted LTV: $1,422.00
CAC payback period: 7.1 months
Profit per customer after CAC: $1,002.00

At or above the common 3:1 benchmark.

Formula

LTV:CAC = (ARPU × Lifespan × Margin) ÷ CAC · Payback = CAC ÷ (ARPU × Margin)

FAQ

Why 3:1?

It's a heuristic, not a law. The ratio must cover operating costs beyond acquisition and leave profit; 3:1 emerged as a practical threshold in SaaS.

What if my ratio is 10:1?

Possibly great economics — or possibly under-investment in growth. If you can spend more on acquisition at similar efficiency, you may be growing slower than you should.