LTV to CAC Calculator
Calculate Customer Lifetime Value (LTV), Customer Acquisition Cost (CAC), LTV:CAC ratio, and CAC payback period.
Unit Economics Breakdown
Churn Sensitivity Analysis
| Monthly Churn | Lifetime | LTV | LTV : CAC |
|---|---|---|---|
| 1% | 100 mo | 8,000 | 10x |
| 2% | 50 mo | 4,000 | 5x |
| 2.5% | 40 mo | 3,200 | 4x |
| 3% | 33.3 mo | 2,667 | 3.3x |
| 4% | 25 mo | 2,000 | 2.5x |
Standard benchmark for sustainable SaaS and subscription businesses.
Evaluate the sustainability and profitability of your customer acquisition model with comprehensive unit economics and churn sensitivity analysis.
Formulas & Methodology
- Customer Lifespan (Months):
1 ÷ Monthly Churn Rate - Gross Lifetime Revenue:
Monthly ARPU × Customer Lifespan - Customer Lifetime Value (LTV):
(Monthly ARPU × Gross Margin %) ÷ Monthly Churn Rate - LTV : CAC Ratio:
LTV ÷ CAC - CAC Payback Period (Months):
CAC ÷ (Monthly ARPU × Gross Margin %) - Net Unit Profit:
LTV - CAC
Worked Acceptance Example
For a SaaS product with:
- Monthly ARPU: $100.00
- Gross Margin: 80%
- Monthly Churn Rate: 2.5%
- CAC: $800.00
The calculations are:
- Customer Lifespan:
1 ÷ 0.025 = 40.0 months - Gross Lifetime Revenue:
$100 × 40 = $4,000.00 - LTV:
$4,000 × 0.80 = $3,200.00 - LTV:CAC Ratio:
$3,200 ÷ $800 = 4.00x(Healthy) - CAC Payback Period:
$800 ÷ ($100 × 0.80) = 10.0 months
Frequently Asked Questions
What is a good LTV to CAC ratio?+
A 3:1 (3x) to 5:1 (5x) LTV:CAC ratio is widely considered the gold standard benchmark for subscription and SaaS businesses. A ratio below 1x loses money on every acquisition, while a ratio above 5x often means you are under-investing in marketing and leaving growth on the table.
How is Customer Lifetime Value (LTV) calculated?+
Customer Lifetime Value is calculated as (Monthly ARPU × Gross Margin %) ÷ Monthly Churn Rate. This accounts for revenue, gross margin costs to deliver service, and the average customer retention lifespan.
What is CAC Payback Period?+
CAC Payback Period is the number of months required for a customer's gross profit to fully pay back the cost to acquire them (CAC ÷ [Monthly ARPU × Gross Margin %]). An ideal SaaS payback period is under 12 months.
How does churn rate affect LTV?+
Churn rate is inversely proportional to customer lifetime (Lifetime = 1 ÷ Churn Rate). Halving your monthly churn rate from 4% to 2% doubles the average customer lifespan and doubles total LTV.